UK investors turn sour on property as investment

Over half of UK investors no longer consider property to be as good an investment as it once was.

Over half of UK investors no longer view property as a good investment, according to a new survey of 1,500 UK investors by Rathbone Investment Management.

Separate research by the National Landlords Association also found that 20 per cent of its members are planning to sell a property from their portfolio in 2018.

Property has long been the favoured asset among investors in the UK, with many people choosing to buy a house instead of investing in a pension. Even the Bank of England’s chief economist Andy Haldane, said in 2016 that he thinks property is a better investment for retirement than a pension.

Amid exponentially growing house prices and a shortage of stock over the last three decades, house prices surged, and so did rents. So far, property has generated large returns, but recent tax changes have led many investors to re-evaluate whether property is still a good investment. 

In April 2016, the government introduced a stamp duty surcharge of 3 per cent on additional properties. Further, the tax relief that buy-to-let landlords could claim on mortgage interest costs has been reduced since 2017 and in April 2020 landlords will no longer be able to claim it. 

This explains while half UK investors in the survey no longer think of property as a good investment.

Robert Szechenyi, investment director at Rathbones, comments: ‘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. 

He argues that 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, which means it’s not necessarily a diverse portfolio. 

He says: ‘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.’

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