This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
Although this year isn’t expected to be an easy one for
property investors, buy-to-let could still provide attractive returns,
according to investment specialist BondMason. The firm has set out its property
investment trends for 2019…
“2019 is likely to
be more gloomy than great for investors,” begins BondMason’s CEO, Stephen
Findlay. “But we expect to see some areas of opportunity, including lending
secured against UK property, which should continue to offer attractive options
for investors looking for moderate returns with relatively low volatility and
good downside protection.”
With tax changes and market uncertainty causing buy-to-let to become less attractive, investing in property isn’t as easy as it once was, yet this asset class can still be made to work well for passive investors.
The backdrop to 2019,
according to BondMason, is the continuation of gloomy news for many investors,
interest rates continuing – whatever the outcome of Brexit, the market is not
expecting interest rate rises
shows every indication of continuing a downward trend, as the bull run
continues to fade
slowing property market, as the drop in London house prices reverberates
outwards, combined with increased housebuilding boosting supply
Findlay continues: “Against
the uncertain and gloomy economic backdrop, BondMason expects to see private
investors continue to be content with an investment exposure to property, as
our research shows people have great trust for investments backed by bricks and
“Indeed, with buy-to-let
looking less attractive, we expect to see more people accessing returns from
property through a variety of approaches, such as property trusts and lending
Sweating your asset
One trend that BondMason sees
as likely to be very interesting in 2019 is the continued growth in the ways
that people can use their homes as an asset that creates income.
“We expect to see more
developments across the whole area of sweating your home as an asset, with
further interesting innovations for investors and homeowners alike,” Findlay
This is something that
has been building for a while. On one side, more spare rooms are being rented,
a trend supported by disrupters like Airbnb, which has proved popular with
families looking to generate more money from their homes.
The Government’s rent-a-room relief has also proved popular, and you can now even use
apps to let your garage to people looking for storage space.
On the financial side,
the growth in the sophistication of equity release mortgages is being driven by
growing pressures to make better use of the family home’s capital value.
Examples include the greater need for the bank of mum and dad to help towards deposits
for children, and also the growing number of semi-retired, baby boomer empty
nesters that don’t want to downsize, but want access to the large amounts of
capital tied up in their homes.
Findlay explains: “The family home is still the most valuable
asset most people have. Instead of hoping to make money simply by upgrading it
and selling at a higher price, we are seeing continued innovation and
popularity in new and improved ways to make this asset work harder.
“Now you can easily rent your spare rooms to
holidaymakers, your garage to people wanting storage and gain large amounts of
capital through equity release mortgages.”
He believes: “In 2019’s sombre economic climate, we
expect even more people will be making use of these existing ways to generate
income from their house, and this will itself spur further innovation,
particularly financial, with more products allowing people to unlock some of
their home’s value, while they are still living in it, and, at the same time,
provide the suppliers of this capital – investors and lenders – a good opportunity
for risk-adjusted returns.”
Wealth in bank accounts
BondMason is also expecting the increased uncertainty
and prospect of lower returns to cause many people to keep their money in the
bank, instead of investments.
However, it warns that its research shows that this
approach has been disastrous for many savers over the past ten years.
Findlay explains: “The combination of low interest
rates and modest inflation means that putting money in the bank is actually the
one investment strategy guaranteed to lose you money in real terms.
“Our research shows that a big problem stems from most
people significantly underestimating the way inflation erodes the real value of
their savings. For instance,if you had £10,000 in a zero-interest
bank account then, over the past three years alone, it will have lost around
£650 in value. About half of people interviewed thought the impact was
substantially less, with nearly 10% mistakenly thinking inflation had no effect
He goes on: “This misconception means many people do
not realise the extent to which inflation is steadily making them poorer. Even
in the good times over the past ten years, many people have continued to keep a
lot of money in the bank through uncertainty and inertia, rather than investing
it after the financial crisis, and this has cost them at least £1,920 in real
terms for every £10,000 of savings.”
Findlay concludes: “My
message to the hundreds of thousands of people with unused cash languishing in
the bank and unsure what to do with it is to instead speak to a financial
adviser and also do your own research. Otherwise, if you leave it there another
few years, you may well find the value of your savings has reduced even further
through the hidden effects of inflation.”
Em is the Content Marketing Manager for Just Landlords, with over five years of experience writing for insurance and property websites. Together with the knowledge and expertise of the Just Landlords underwriting team, Em aims to provide those in the property industry with helpful resources.
When she’s not at her computer researching and writing property and insurance guides, you’ll find her exploring the British countryside, searching for geocaches.
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