What next for buy-to-let investors?
As property investors consider their options in 2019, many are facing a market in which it is getting harder to make the returns they have become accustomed to from buy-to-let investments.
While the buy-to-let market boomed for two decades in the UK after being introduced, in the last few years it has started to contract as new regulation has come into force and the tax burden on landlords has increased.
With Bank of England figures showing that the lending market for buy-to-let is declining, have we reached a point where property investors are starting to look for alternatives to their buy-to-let portfolios?
Research last year from Octopus Choice suggested a mixed picture. Of 1,000 UK buy-to-let landlords surveyed, 56% said they planned to increase or maintain their portfolio in the next five years, against 44% who planned to sell all or part of it.
The move away from buy-to-let was particularly noticeable among younger landlords, with almost two-thirds of 18-34 year-olds planning to sell at least part of their holdings. Many said that they believe buy-to-let will become a less worthwhile investment in the years that follow.
For landlords cooling on their buy-to-let portfolios, there is now a growing range of alternative investments that allow people to put their money in property without the extra work that being a landlord entails.
Products such as Octopus Choice, which offer peer-to-peer loans, secured against property, let investors maintain their interest in the market through a vehicle that can reduce both workload. As a peer-to-peer investor, you invest in loans in return for a share of the interest they generate. At Octopus Choice, we invest with you, putting 5% into every loan, and ensuring you get your money back – and earn your interest – before we do.
As the property market evolves, investors have more opportunities and different ways to invest. For many, asset classes such as buy-to-let will remain a central part of their portfolios. Those looking for an alternative have options including peer-to-peer lending to consider.
Though they should remember, as with all investments, that their capital is at risk and interest is not guaranteed. P2P lending is not covered by the Financial Services Compensation Scheme.