Research showed investors who purchased a BTL property with a deposit of £25,000 could expect to see a £39,309 profit (157 per cent) over six years, compared to a profit of only £415 (2 per cent) for FTSE 100 investors over the same period.
Gold was the second most profitable asset, with returns of 90 per cent, while investors who placed their capital in a savings account saw profits of 28 per cent.
Lee Grandin, managing director of Landlord Mortgages, said: “While BTL property requires a relatively large minimum investment, this research shows you can make considerable gains on capital invested in this asset class. However, it often requires more commitment from investors than other asset classes and should be seen as a business rather than simply an investment. This sector is not regulated by the Financial Services Authority (FSA), so potential landlords need to make sure they do their research and understand the market.”
Mortgage Trust also revealed BTL investors are increasingly looking for lower rental income requirements and higher loan-to-value (LTV) limits to maximise their investment potential.
Of the intermediaries surveyed, 40 per cent said half or more of clients wanted products with rental income requirements of less than 125 per cent, while 26 per cent of intermediaries said half or more of clients were looking for products offering LTV limits over 85 per cent.
Nicola Severn, marketing manager for Mortgage Trust, said: “With rental demand remaining strong and house prices continuing to climb, it is no surprise that BTL investors are keen to secure higher LTV loans and release equity in order to maximize their investment potential. They do, however, maintain a business like approach and continue to prefer a healthy rental income margin of between 10 and 25 per cent.”
