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Did you know that £1,000 cash (ie no mortgage) invested in the average UK buy-to-let property in 1996 would now be worth £5,071, equating to a compound annual return of 9.4%?**
If the £1,000 had instead been invested in a property with a 75% loan-to-value mortgage, it would now be worth an impressive £14,897 – equivalent to a compound annual return of 16.2%. Granted, this figure is going to be lower going forward, due to the upcoming reduction in mortgage interest relief for landlords, but will still outstrip the return achieved by cash buyers above
The returns on UK buy-to-let outstrip UK commercial property (8.7%) and UK Government bonds (6.9%). UK equities (9.9%) just about beat buy-to-let if you steadily reinvested the dividends, but not if you spent this income (6.4%)
For those that invested using a mortgage, 29% of the returns came from income (rents minus costs), and 71% from capital gain. For those invested using cash, 43% came from income whilst 57% from capital gain.
** Get in touch with us if you'd like the research details behind any of these figures
Despite recent changes to mortgage interest tax relief and stamp duty increases, buy-to-let (BTL) is still likely to prove an excellent and reliable investment, providing you pick the right properties. This is where Go Global Investments can help you.
The three most important things to consider are probably location, rental income and your potential tenants. Get these three things right, and you won’t look back.
Is there likely to be full/high occupancy of your property? Is the type of property in high demand in the area? If it is close to areas where lots of people work or want to work, then it is likely to appeal to young professionals. These days, young professionals typically want high-spec, modern, contemporary homes, with good security and good facilities.
Or, more importantly, income after all costs. Our properties are the new ‘branded’ type of developments, where you have the option of a management company that will take care of everything, at low cost – so you get to think about how to spend or reinvest the income, instead of sorting out the broken boiler. The management companies get the benefit of buying in bulk, so the total cost of maintenance, services, insurance, finding and vetting tenants, correct handling of deposit monies etc etc will typically be around 25% of your total rental income. So you keep approximately 75% of your income (not including any tax you may need to pay), with little or no hassle.
Young professionals, families, students. They’ll all have different wants and needs, but also some in common. Does the property have good links to buses and trains? Is there parking? How far is the supermarket? Can you walk to work or school or university?
Manchester prices top the growth table at 8.8%
Despite government measures against buy-to-let, fewer landlords expect to sell
More graduates now studying for masters degree
Fears of a Brexit-induced fall in demand overdone....
Interest rate at or below current level for at least five years
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