Peter Grant: Buy-to-let brings solid annual returns

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MUCH is written about the UK housing market with financial experts and columnists highlighting the implications of using pension cash to invest in residential property – rising property prices, speculation of when interest rates will rise and the affordability gap for first-time buyers.

Yet 18 years after co-founding Grant Property Investment, one of the UK’s most successful property management and investment companies, I’m confident that the buy-to-let sector continues to offer solid annual returns – especially residential period property in a prime location. It’s a statement supported by facts, stats and 18 years’ investment experience. During this time the company has sourced over 2000 properties on behalf of clients based in over 30 countries. Our best advice is always to stop focusing on the headlines and look at the facts.

The recently published Ten year report into house prices (2005-2015) by Registers of Scotland, notes that nationally, average residential house prices have grown steadily. Figures (2011 census) from the Office for National Statistics reveal that in England and Wales the proportion of owned homes fell (roughly 64 per cent to 69 per cent) over the 2001-2011 period. At the same time, (non-social) rental demand increased from 12 per cent to almost 19 per cent. Faced by tighter mortgage lending rules and property prices far outstripping their affordability, many appear to have chosen to rent.

It’s therefore perhaps unsurprising that the BBC has cited a statistic from the National Housing Federation that the UK has the highest rents in Europe. Tenants here spend 39.1 per cent of their income on rent compared to a European average of 28 per cent. Indeed the HomeLet Rental Index notes that in addition to SW England, rents in Scotland have increased by over ten per cent.

As a business, we focus on sourcing, refurbishing and letting quality, period buy-to-let property on behalf of investors. Over the past decade, overall returns in prime residential property have outperformed all other asset classes and we remain confident that it will continue to do so especially in hot-spots like Edinburgh and Glasgow.

When all is said and done, it’s useful to have stats and facts to inform an investment decision. So I’ll leave you with my own statistic and prediction. The remainder of this year will continue to be buoyant, with prime areas experiencing annual capital growth of between three and five per cent.

Peter Grant is CEO of Edinburgh-based Grant Property Investment