Buy-to-let returns dwarfing ISAs

Despite the government’s actions to dampen buy-to-let profitability, bricks and mortal still offer far better investment returns than ISAs, Benham and Reeves analysis shows.

A £20,000 investment into stocks and shares ISAs 10 years ago would have delivered an annual growth rate of 2.3% per year, yielding a return of £25,156.

Cash ISAs have typically failed investors, with the rate of growth averaging at -4.1% per year.

Buy-to-lets would given an annual return of 4.3%, meaning a £20,000 investment a decade ago would be worth £30,470 today.

Marc von Grundherr, director of Benham and Reeves, said: “The story of the ISA millionaire is one that is heavily publicised and many have looked to these products as a way to build wealth.

“There’s no denying that some have been successful in doing so, however, those with an eye on the long term simply won’t see a substantial return based on their historic performance over the last 10 years.

“There really is no safer investment than UK bricks and mortar and the Buy-to-Let sector has outperformed both stocks and shares and cash ISAs quite considerably over the last decade.

“Of course, the government has done its best to dampen this return but even with changes to tax legislation and an increase in stamp duty costs, rental market investments continue to yield very strong returns.”

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