Results from a survey undertaken by Rathbone Investment Management have revealed that many UK investors are reconsidering the investment potential of properties.
Despite buy-to-let properties attracting a number of people looking to invest over the years as a way of supplementing their income and a clear demand for such housing from tenants, it appears that interest in the industry may be waning.
These results show that of the 1,000 investors and 500 high-net-worth (HNW) individuals polled, 38% of investors in the UK have responded that they no longer view property as a good investment. Many are re-evaluating the cost-effectiveness of properties as an investment, in light of recent tax changes, such as the 3% Stamp Duty surcharge.
Those who fall into the category of ‘richer’ investors had a more positive outlook. Looking at those with a high net worth who were surveyed, 25% currently own buy-to-let properties. Only 7% have plans to add to their portfolios, and 38% have admitted that they now see property as a poor investment.
Robert Szechenyi, investment director at Rathbone Investment Management, has commented: “Recent changes to the tax and regulatory treatment of buy-to-let has caused investors to take a step back and assess the viability of these investments.”
“Whilst it’s understandable that property, and in particular residential property, has been a popular investment in the past, it’s now making less and less sense.
“Not only are the returns now being impacted by an increased rate of tax, but they can also prove high risk investments due to a lack of diversification.
“Property investments require a large amount of capital to be held in one single asset and landlords will often hold a number of properties within one region.
“Investors who are looking to invest in property, should make sure to assess their risk appetite, look at all alternative options and make sure this property is held within a well-diversified portfolio of investments.”