A comparative analysis of returns for buy-to-let and other major asset classes since 1996 shows buy-to-let returned just under 1,400%, according to The Wriglesworth Consultancy, which reported: ‘Last year we released the first quantitative comparison of long term investment returns comparing UK buy-to-let to the other main asset classes: equities; gilts; commercial property; and cash.’

Using 18 full years of data from Q4 1996 (the year the BTL mortgage initiative was launched by ARLA) to Q4 2014, the firm discovered that every £1,000 invested in an average buy-to-let property purchased with a 75% loan-to-value (LTV) mortgage in the final quarter of 1996 would have been worth £14,897 by the final quarter of 2014, a compound annual return of 16.2%. 

The same investment in UK commercial property would have grown to £4,494; in gilts (UK government bonds) to £3,329; in UK equities (shares) to £3,119; and in cash to £1,959.

A buy-to-let purchaser buying entirely with cash would have seen each £1,000 invested grow to £5,071 by the end of 2014 – a compound annual return of 9.4%.

Rob Thomas, director of research at The Wriglesworth Consultancy and author of the report says: “It should be invaluable for investors seeking to understand the relative performance of different investments over the longer term and shows the outstanding average returns enjoyed by buy-to-let investors over the past 18 years.”