Proof that buy-to-let investment is very much alive and kicking
We’ve been telling property investors to ignore the doomsayers since the vote for Brexit in June 2016. The latest investment news confirms just how wrong the economic ‘experts’ and property market observers have been. House prices are up, and investors are increasing the size of their property portfolios as their returns continue to stamp all over inflation.
UK house prices are rocketing, at almost twice the rate of inflation
The latest data from ONS/Land Registry has revealed that property investors continue to see the value of their portfolios rocket way above the rate of inflation. The average UK house price (now £226,000) increased by £11,000 between July 2016 and July 2017, and by £2,000 between June 2017 and July 2017 – that’s an annualised rate of 11.25%!
If house prices continue to rise at the rate they did in between June and July this year, by July 2018, the average house price in the UK will be £25,425 higher than they were in July 2017. But let’s stop speculating, and get back to what has happened, rather than what may happen.
The annual rate of house price growth to July 2017 was 5.1%, compared to general inflation of 2.6%.
These latest numbers confirm that house price inflation in the UK has remained at or around 5% for most of 2017. Since the single month blip of a growth rate of 3.8% in March of this year, the rate of growth has bounced back and is now trending up again.
Even in the worst performing region, London, property prices are rising faster than inflation. In some regions of England, property prices are rising by almost three times the rate of inflation, evidence that investment property is the best asset for inflation-beating wealth.
UK landlords – buying more property and owning larger portfolios
The latest research from Countrywide shows that landlords in the UK now own the largest numbers of properties in the largest portfolios on record. The buy-to-let stock in the UK has increased to 5.1 million homes today from 4.9 million in 2015.
Three-quarters of the 3.56 million buy-to-let landlords in the UK own one property. That’s down from 86% in 2015. The average property portfolio size is 1.44 properties per landlord, versus 1.33 in 2015 and 1.24 in 2010.
Contrary to so many news reports, the changes in tax for landlords has not produced a mass exodus out of buy-to-let properties. In fact, landlords are finding that you can get around the UK tax changes. Strategies to do so include investing as a limited company rather than individual investors. Many couples have chosen to take this route, which could be one reason why the actual numbers of landlords have fallen from 3.72 million in 2015 to 3.56 million today.
What do we say?
Forget the numbers of landlords in the UK. The important figure to look at is the number of properties owned by buy-to-let investors. It continues to rise. This is the news that doomsayers don’t want you to hear. They want you to believe that landlords are rushing out of the market. They’re not. Couples are amalgamating properties into larger portfolios, where it is tax-advantageous to do so.
Investors are finding tax-efficient ways of buying and holding property. They own more property and in larger portfolios than ever before. That’s not a market lacking in confidence. It is the sign of a fully functioning and effective sector of the property market.
Further, those portfolios are securing the future of property investors. Property prices are rising above the rate of inflation, making the savviest investors very wealthy in the long term.
To stay abreast of all the property investment news that matters, contact one of our team today on +44 207 923 6100. Ask about our newsletter. We give it to you straight. No BS. No hype.
Live with passion
Brett Alegre-Wood
