Another day, another shocking report concerning the recent exodus of investors from the buy-to-let market.
A report from the Residential Landlords Association (RLA) released on Thursday showed that out of the 2,500 landlords questioned by the trade body, around 25% of those questioned are looking to sell at least one of their properties during the next 12 months.
This is also the highest proportion since the RLA began asking the question regularly back in 2016. On top of this, the survey revealed that a third of respondents said that they had low levels of confidence in the private rented sector for the next year.
A risky market
It would be absurd to suggest that the buy-to-let market is on its last legs, though. Indeed, there’s plenty of evidence out there to show that certain segments of the sector, like the house of multiple occupancy (or HMO) arena, continue to deliver some decent returns.
What’s more, it could be argued that the environment is ripe for opportunistic investors to still make a mint from the rentals market. The aforementioned landlord evacuation leaves even less accommodation options for renters to choose from in an already-undersupplied market, laying the groundwork for rents to keep on rising.
That said, the outlook for buy-to-let participants is more uncertain now than it’s ever been before, and this is why property purchases for buy-to-let purposes are drying up.
The government’s failure to build enough houses to satisfy first-time buyer demand is well publicised and the political implications of this mean that more rounds of expensive regulation, curtailed landlord power and higher tax liabilities will be used to drive more and more proprietors out in the years ahead.
Considering that rampant house price growth could also have gone the way of the dodo, I believe that anyone considering taking the plunge with buy-to-let would be most unwise.
A better bet
So what’s a better way to use your money? It’s certainly not by pursuing low-yielding investments like Cash ISAs, in my opinion, financial products whose meagre interest rates continue to be outstripped by current rates of inflation.
Nor can the answer be found in the ultra-turbulent Bitcoin space, an asset class which has enjoyed a renaissance in buyer interest in 2019 but where huge questions over its legitimacy continue to reign.
A superior way to use your money is by ploughing your excess cash into the tried-and-tested arena of stock markets, in my opinion. Everyone knows that this asset class can also be prone to bouts of volatility on a variety of geopolitical and macroeconomic factors, but over the long term, it’s been proven time and again to be a great way to make money.
Just ask the growing number of Stocks and Shares ISA millionaires who are making the most of increased annual allowances in recent years. In fact, with UK companies paying out dividends at an unprecedented level (hitting a record £19.7bn in the first quarter, according to recent data from Link Asset Services) there’s arguably never been a better time to load up on stocks than right now.