18 years of growing returns for buy-to-let

It was back in 1996 that the Association of Residential Letting Agents launched an initiative to encourage more people into buy-to-let investing. Now anyone who made the move is likely to be pleased, according to new figures issued today.

Over the past 18 years buy-to-let has provided average returns that outstrip those of comparable major asset classes, according to a report from the Wriglesworth Consultancy.

It reckons that every £1,000 invested in an average buy-to-let property, purchased with a 75 per cent loan-to-value mortgage in the final quarter of 1996, would have been worth £13,048 by the final quarter of 2013, a compound annual return of 16.3 per cent.

The same investment in UK commercial property would have grown to £3,654, while sticking a grand into UK shares back in 1996 would have seen your portfolio grow to just £3,082 by the end of last year.

Gilts – UK government bonds – would have increased to £2,924 over the period while money in a deposit account would have appreciated to £1,949.

John Heron, director of Paragon, said: "Buy-to-let mortgages have become such an integral part of today's market that you easily forget that the product didn't exist prior to 1996."