BTL investors stand by the sector despite ‘detrimental’ changes

Some 73% of buy-to-let investors considered property as the best, least volatile long-term investment when compared to all other asset classes, a new study by Benham and Reeves has found.

The independent letting and estate agent surveyed over 5,000 buy-to-let investors on their current feelings around investment and the future of the sector.

Amidst numerous government changes to the sector, 66% of those asked believe that the UK government would fail to implement any initiatives aimed to boost overseas investment in order to drive consumer demand.

And, with Brexit continuing to dominate the headlines with no end in sight, it’s no surprise that 72% of investors have had their outlook on the UK property market altered since the vote, with 68% now less confident in the market itself.

With more changes to property and investment laws on the horizon, the research also revealed that 80% are unfamiliar with the latest changes to the buy-to-let market.

What’s more, the recent changes to Section 21 notices – which have only just been implemented – have also had an impact, with 66% of investors now more cautious about investing.

However, there is divided opinion over changes to buy-to-let tax relief and whether the sector still provides a good investment as a result, with 49% believing it does and 51% no longer sure.

Some 60% of investors are confident that rates will remain low over the next five years and while 66% aren’t as positive in an adequate return over this time period, 22% remain very confident, with just 10% not at all confident.

However, with buy-to-let always requiring a long-term investment outlook, this increased to 37% of investors feeling very confident that they will see an adequate return over the next 10 years, with a further 6% stating they were extremely confident and 51% not as confident.

Despite the recent dip in sentiment, 83% of investors stated it was either unlikely or very unlikely that they would sell their property over the next year, with the majority (58%) staying put for five years.

Marc von Grundherr, director of Benham and Reeves, commented: “The Government has really gone to war with buy-to-let investors of late and a consistent string of detrimental changes to the sector through stamp duty increases, tax relief changes and a ban on tenant fees has had the desired impact of denting industry sentiment and dampening appetite for future investment due to a reduction in profitability.”

He said that on a much longer timeline, this is a ‘mere blip’ for the institutional buy-to-let investor. While Brexit poses an obstacle for the immediate future, the market remains ‘the investment option of choice’, with many investors confident on a return further down the line.  

“This is a testament to the durability of buy-to-let bricks and mortar in the UK as, despite a government-backed clamp down, it remains a lucrative business and one that continues to gain the backing of those that are on the frontline,” he concluded.