For many people buy-to-let continues to look an attractive income investment at a time of low saving rates and stock market volatility.
Despite the introduction of higher stamp duty purchasing costs, the scrapping of the wear and tear allowance, the pending removal of landlords’ mortgage interest tax relief from next year, and the fact that the average rental yield in the UK has eased, many investors continue to be drawn to the buy-to-let market as the returns routinely outperform those of other investments.
Buy-to-let returns continues to beat most other mainstream investments, while remaining a highly popular alternative to the volatility investors often risk when investing in the stock market, as illustrated by the growing success of Grainger.
The company, which has a portfolio of residential rental property assets worth more than £2.7bn, has been one of the property industry’s top stock market performers this year, with its share performance beaten only by the industrial developer Segro and the London landlord Shaftesbury.
The company reportedly attributes its success to two factors: that the rental market is considered one of the most resilient asset classes, and that it has spent the past year repositioning itself.
With the arrival of new chief executive Helen Gordon in January, Grainger has set its sights on becoming the UK’s leading private landlord by focusing on private rented homes.
Gordon, a former RBS executive, set out a plan to accelerate the acquisition of homes for rent, with shareholders set to benefit.
Grainger has promised that its dividend each year will be equal to 50% of rental income, which is likely only to grow as the number of homes it owns increases.
With demand for rented housing continuing to grow, Grainger is in a potentially good position to capitalise on the needs of ‘Generation Rent’, as are those buy-to-let landlord who carefully plan their property investment strategy.
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And they can also cash in on the discriminatory treatment by the Government against current landlords. This has also been key to their 'success.;' as has been and will be charging rents which grow through the roof. They will gain more dominance as well so renters will have little choice if the cheaper landlords are driven out.
As many institutions like these donate to the Conservative Party it's a case of 'you scratch my back, I'll scratch yours.' It's a disgrace. Grainger had better watch its back. If Labour gets in (and we live in a strange world now), they'll most likely disallow institutions' finance costs and tax them on turnover as well. If I had the money to spare I wouldn't touch Grainger with a barge pole.
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