Buy to let remains popular with wealthy investors

A wealth and investment management company says wealthy UK investors are pivoting to buy to let.

Research by Rathbones reveals many investors are willing to embrace complexity and risk, in turn for higher returns, despite legislative uncertainty.

The Renters’ Rights Act, Making Tax Digital, and selective licensing are just a few of the challenges landlords now face.

Investment in BTL rises sharply

According to data from 3,092 UK adults with investable assets of up to £2.5 million, investment behaviour changes markedly once tax-efficient savings options are exhausted, with wealthier investors far more likely to pursue complex and higher-risk investments.

Investment in buy to let rises sharply with wealth, from just 4% among investors with £25,000–£250,000 of investable assets to 35% among those with more than £2.5 million.

Isabella Galliers-Pratt, senior investment director at Rathbones, said: “As wealth increases, investors are more willing and able to take on higher levels of risk. Greater financial resilience gives them the confidence to explore opportunities beyond mainstream wrappers.

“The right route depends on time horizon, risk tolerance and personal tax circumstances.”

However, Rathbones warns that while buy-to-let remains popular, its appeal has diminished.

According to Rathbones’ analysis, house prices have barely kept pace with inflation since 2016, while tax and regulatory changes, along with higher borrowing costs, have eroded returns. As a result, many buy-to-let investments are now less attractive on a risk-adjusted basis, particularly when leverage is used.