British Pearl Reveals Buy to let Mostly Profitable Over Five Years

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New research from British Pearl has revealed average UK buy to let prices over any five-year period in the past half-century would have resulted in a profit 83 per cent of the time.

According to analysis from British Pearl average house price appreciation over the last 50 years stood at 58.6 per cent. Property prices fell during just five periods in this time, representing an 89.1 per cent success rate.

When factoring in Stamp Duty and conservative estimates for mortgage payments, legal fees and interest, British Pearl were able to identify a further three years in which investors who purchased properties would have lost money over the following five. This averages a success rate of 82.6 per cent.

It was only during the UK’s serious economic downturns that house prices fell. These include 1989, 1990, 1991, as well as 2007 and 2008.

The best profit for the average landlord would have been for those buying in 1969, resulting in a gain of £4,589. This equates to a return of 148.6 per cent as prices rose from £3,818 to £8,936.

The most significant fall in house prices occurred between 2007 and 2012. UK values declined by 7.9 per cent on average.

Investment Manager at British Pearl, James Newbery, 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. 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.

‘The message, not just for investors but homeowners, too, is to play the long game. UK property has a track record of returns and, no matter how tempting it is to think prices are unsustainable, the level of demand for housing in Britain makes property one of the most attractive asset classes on an ongoing basis.’

He added: ‘Those investors who ran for the hills after the dip between April 2007 and April 2013, only for growth to recover in the years that followed, will be kicking themselves for acting on impulse and abandoning property altogether. The secret to successful property investing is ultimately the same now as it ever was. The market consistently rewards those who remain level-headed, diversify portfolios and do their research.’