INVESTORS are cautious about putting money into property, a survey has found, despite separate research showing that the sector has been a solid investment over the last 50 years.
A poll of 1,000 investors commissioned by Rathbone Investment Management found more than a third of those with between £1,000 and £100,000 no longer view property as a good investment, due to recent tax and regulatory changes in the buy-to-let sector.
“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,” Robert Hughes-Penney, investment director at Rathbones, said.
“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.”
However, separate research from peer-to-peer lender British Pearl found that returns from property consistently hold up to scrutiny.
Its research revealed that investors have made a profit from buy-to-let properties 83 per cent of the time over any five-year period during the past half-century.
The only periods in which house prices fell were during some of the UK’s most challenging economic downturns. They included 1989, 1990, 1991 — while Britain was grappling with the recession of the early 1990s — as well as 2007 and 2008.
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The sharpest fall in house prices occurred between 2007 and 2012 when average UK values slumped by 7.9 per cent, British Pearl said.
“This research shows investors who play their cards right and hold their nerve in the midst of economic or political upheaval are still likely to come out on top,” James Newbery, investment manager at British Pearl, said.
“History shows us that investors who are prepared to weather storms rather than run for cover are still able to make strong returns at times from investments that present a very limited risk of loss.
“While our analysis shows housing has been a solid investment over time, we know that returns can be bolstered with careful property selection, identifying regional trends and areas of rental yield strength.”