March 1, 2010
Profits up for buy to let investors
Residential property has been a better investment than cash, shares or bonds over the past decade, in spite of significant falls in house prices between 2007 and 2009, according to Halifax research…
UK house prices were up 105 per cent in the 10 years to December 2009, while buy-to-let landlords could have made total returns of 187 per cent including rent, said the biggest mortgage lender.
Halifax’s buy-to-let performance is based on the original value of the property and includes a 33 per cent deduction from gross rents to cover costs.
However, landlords with mortgages would have been able to make even higher percentage returns compared with the deposit they committed.
Precious metals, up 242 per cent over the decade, were the best-performing asset class, according to the research, but UK shares, cash and bonds all trailed property.
Martin Ellis, group economist at Halifax, said: “Property has still delivered good long-term gains despite recent turbulence.” But the poor performance of UK shares, which registered one of their worst decades ever, would “make people think harder whether they want to invest in equities”, he said.
The UK stockmarket was only up over the decade on a total return basis including dividends. But with inflation totalling 30 per cent over the decade, investors still failed to make a real return.
Gold soared 277 per cent, while commodities were up 137 per cent to end-2009. “Precious metals were the top performing asset during the Noughties, reflecting increased demand from China and India for industrial uses and jewellery, “ said Halifax.
