Investors cautious about the uncertain buy-to-let market could seek better returns in alternative investments such as Innovative Finance ISAs (IFISAs), jewellery, fine wine and classic cars, Sourced Capital has claimed.
The peer-to-peer property lending platform looked at the best alternative investments for those wary about entering into the buy-to-let market because of the Covid-19 pandemic leading to mortgage holidays and a government freeze on evictions.
At present, the average UK property provides a rental yield return of just five per cent, or 4.2 per cent when investing in bricks and mortar in the capital.
Meanwhile, Sourced Capital’s IFISA gives returns of up to 12 per cent.
Since 2005, investing in jewellery has proved a better option than buy-to-let, with an average annual return of 6.7 per cent and vintage watches have made returns of 8.4 per cent per annum.
Furthermore, fine wine has seen an average annual return of 13.2 per cent since 2005, while classic cars top the list with a return of 16.4 per cent.
“It’s fair to say that many will be sitting tight before investing in a buy-to-let property in the current climate and wider financial turbulence could cause investment levels across all areas to drop for the short-term,” said Stephen Moss, founder and managing director of Sourced Capital.
“However, there remains money to be made for those investing in the right areas and with the diversity of the UK property market, even buy-to-let can still bring a very healthy return for those investing in the right pockets of the market.
“Although uncertainty remains due to the current pandemic, we’ve seen a notable increase in interest from both franchisees and those looking to fund projects, as many are anticipating life after lockdown in order to hit the ground running and minimise any financial impact that may come as a result.
“Alternatively, you may want to opt for an investment into fine wine or classic cars when it comes to beating the coronavirus investment lull.”