February 19, 2018
Property remains the most popular investment choice
With savers continuing to receive poor returns from banks and building societies, thousands of people unsurprisingly continue to turn to residential property as a means of supplementing their income, supported by record-low mortgage borrowing rates, solid demand from tenants and stable yields, as buy-to-let consolidates itself as the investment of choice.
Despite a challenging 2017 for the buy-to-let market, characterised by tax and regulatory changes, investment in buy-to-let continues to outperform most major asset classes, as Britain’s rented sector continues to expand, with a sixth of the population – some 10 million people – now living in accommodation rented from private landlords.
The latest ONS Wealth and Assets Survey covering the period July 2016 to June 2017 found that almost half of Britons – 49% – considered that property would make the most of their money, continuing the rising popularity for this option since July 2012.
This compares with 22% for employer pension schemes, the second most popular option, while the popularity of ISAs and savings accounts has followed a decreasing trend.
Reflecting on the findings, Paul Latham, managing director of Octopus Investments, said: “Property has long been a popular investment choice and as the results suggest, is becoming more so, as house price growth continues and returns on savings remain low.
“The recent fall-off in cash ISA subscriptions would seem to indicate that many savers aren’t happy with the returns on offer from savings accounts – especially when you consider that today’s climate of inflation means the purchasing power of the cash held within ISAs will actually be shrinking in real terms.
“In this context, it’s perhaps not surprising that property – a ‘tangible’ investment choice which has long been a firm favourite for British investors – has grown in popularity over the last year or so.”
According to a recent poll, almost half of buy-to-let landlords are looking to expand their property portfolios despite recent tax changes in the industry.
Despite the existing phasing out of mortgage tax relief and the introduction last year of the 3% stamp duty surcharge for those acquiring an additional home, including a buy-to-let property, many landlords are currently looking to add to their portfolios, the latest Mortgages for Business’ Property Investor Survey has revealed.
Despite the range of changes having an adverse impact on the buy-to-let market, 44% of landlords surveyed said that they plan to expand their portfolios during the first half of this year.
Steve Olejnik, chief operating officer of Mortgages for Business, said: “The results show that many landlords are more optimistic about the future of property investment than some commentators would have you believe.
“Of course, there will be some who will choose to leave the sector but this will create opportunities for those who are in it for the long-term.”