Long-term buy to let investment beats other options - new research

Long-term buy to let investment beats other options - new research
Oct 09 , 2020

The absence of good alternative investments and the modest pace of capital growth for property in recent years are thought to lie behind a new trend for landlords to hold on to buy to lets for longer than ever before.

Research by a London lettings agency - ludlowthompson - shows that 29 per cent of investment properties sold in 2018 had been owned for more than 15 years. This is an increase from 22 per cent just two years previously.

Meanwhile only one in five investment properties sold in 2018 had been owned under five years, showing fewer buy to let landlords seeking to make quick profits.

The agency says analysis of alternative investment options show just how sensible landlords are to hold on to their properties.

For example, the FTSE-100 has fallen in value over the last five years and by the end of June this year, and 44 of the FTSE-100’s companies had announced dividend cuts or suspensions - many because of the Coronavirus crisis.

In the third quarter of this year, FTSE-350 companies had cut dividends by 57 per cent, the agency claims.

Whilst share prices have been volatile since the stock market crash in March, when coronavirus fears shook global indices, UK residential property prices have been stable or rising.

Company chairman Stephen Ludlow says: “Greater numbers of buy to let investors are now in the market for the long term. Interest rates are predicted to stay ultra-low for some time and that helps keep mortgage costs low and rental yields extremely attractive versus other income producing investments."

He adds: “This is good news for both the investors and their tenants. The government has been keen to encourage long term leases to provide certainty for renters. Investors who are planning on holding onto a property for some time provides this guarantee. Furthermore, they are more likely to invest more money into the property’s up-keep.

“The residential property market has held up considerably better than the commercial property sector during these challenging last few months.

“As London gets up and running again, with workplaces, schools and universities re-opening, demand for rental properties in the capital is likely to continue growing. For long term investors, entering the residential property market could be an attractive option for individuals looking for a steady, stable form of income.”