Ashford Buy To Let Annual
Returns Hit 13.91% in Last 10 Years
Many Ashford people ponder where to invest their hard-earnt savings and the best piece of advice I can give you is to do your homework and speak to lots of people as much depends on your attitude to risk versus reward. Normally, the lower the risk, the lower the reward whilst a higher risk is normally associated with the possibility of higher returns, although nothing is guaranteed. At the same time, higher risk also means higher possible losses on your investment – yet if one looks at the bigger picture, the biggest threat to investing, predominantly when the investment is made in the short term, isn’t risk but volatility.
So where should you invest? Building society, the stock market, gold or property are all options. This article isn’t designed to give you advice – just to illustrate how different investments have performed over the last decade.
Let me start with the humble semi-detached house in Ashford … which in 2009 was worth £178,400 … so assuming I bought a property for that figure, I then looked at what if I had simply left the same amount of money in a building society, or invested into gold or the stock market…
Putting your money into the stock market (FTSE100) would have given a return of 30.2% on your capital over those 10 years and an average of 3.79% a year in dividends (making an overall increase of 74%).
Gold doesn’t pay interest or dividends – but has increased in value by 26.9% over the same 10 years whilst by leaving your money in the building society, the money hasn’t increased in value, but would have earned you interest of 24.46% or the equivalent of 2.21% per year.
Investing in an average semi-detached house in Ashford over the last 10 years has seen the capital increase by 60% (an equivalent of 4.81% per annum) and the income (i.e. the rent) has provided a return, based on the original purchase price, of 138.96% or the annual equivalent of 9.1% … meaning the overall return, based on the original purchase price of an average semi-detached property in Ashford, is 13.91% per annum.
Don’t forget, though, the great appeal of Buy to Let, in addition to the tangibility of bricks and mortar, is the ability to leverage your capital – achieving those BTL returns may only have required £45,000 of a landlord’s own money – the balance financed via a mortgage at, historically, an incredibly favourable interest rate!
Notwithstanding No.11 Downing Street’s grab at buy to let landlord’s profits by hitting the buy to let sector with several fiscal punishments: a 3% stamp duty level, a decrease in high rate tax relief for landlords and an increase in rate of CGT on residential property profits, the facts remain that ‘bricks and mortar’ is still one of the pre-eminent and most consistent investments available.
The bottom line is, Buy to Let investment remains a mainstay of the British property market, serving to support aspiring homeowners as they work to conquer the, sometimes difficult, financial hurdles of home ownership.
With Central Government over the last 30 years only paying lip service to address the lack of new homes being built or tackling affordability on any significant scale, it is highly probable this will continue for the next 5, 10 or even 50 years as there will always be a call for respectable, and above all, honest buy to let landlords to deliver decent housing to those that need it.