Property News

Property Investment Trends for 2019, by BondMason

Rose Jinks - January 3, 2019

Although this year isn’t expected to be an easy one for property investors, buy-to-let could still provide attractive returns, according to investment specialist BondMason. The firm has set out its property investment trends for 2019…

“2019 is likely to be more gloomy than great for investors,” begins BondMason’s CEO, Stephen Findlay. “But we expect to see some areas of opportunity, including lending secured against UK property, which should continue to offer attractive options for investors looking for moderate returns with relatively low volatility and good downside protection.”

With tax changes and market uncertainty causing buy-to-let to become less attractive, investing in property isn’t as easy as it once was, yet this asset class can still be made to work well for passive investors.

The backdrop to 2019, according to BondMason, is the continuation of gloomy news for many investors, from:

  • Flat interest rates continuing – whatever the outcome of Brexit, the market is not expecting interest rate rises
  • Equity shows every indication of continuing a downward trend, as the bull run continues to fade
  • A slowing property market, as the drop in London house prices reverberates outwards, combined with increased housebuilding boosting supply

Findlay continues: “Against the uncertain and gloomy economic backdrop, BondMason expects to see private investors continue to be content with an investment exposure to property, as our research shows people have great trust for investments backed by bricks and mortar.

“Indeed, with buy-to-let looking less attractive, we expect to see more people accessing returns from property through a variety of approaches, such as property trusts and lending platforms.”

Sweating your asset

One trend that BondMason sees as likely to be very interesting in 2019 is the continued growth in the ways that people can use their homes as an asset that creates income.

“We expect to see more developments across the whole area of sweating your home as an asset, with further interesting innovations for investors and homeowners alike,” Findlay claims.

This is something that has been building for a while. On one side, more spare rooms are being rented, a trend supported by disrupters like Airbnb, which has proved popular with families looking to generate more money from their homes.

The Government’s rent-a-room relief has also proved popular, and you can now even use apps to let your garage to people looking for storage space.

On the financial side, the growth in the sophistication of equity release mortgages is being driven by growing pressures to make better use of the family home’s capital value. Examples include the greater need for the bank of mum and dad to help towards deposits for children, and also the growing number of semi-retired, baby boomer empty nesters that don’t want to downsize, but want access to the large amounts of capital tied up in their homes.

Findlay explains: “The family home is still the most valuable asset most people have. Instead of hoping to make money simply by upgrading it and selling at a higher price, we are seeing continued innovation and popularity in new and improved ways to make this asset work harder.  

Property Investment Trends for 2019, by BondMason

“Now you can easily rent your spare rooms to holidaymakers, your garage to people wanting storage and gain large amounts of capital through equity release mortgages.”

He believes: “In 2019’s sombre economic climate, we expect even more people will be making use of these existing ways to generate income from their house, and this will itself spur further innovation, particularly financial, with more products allowing people to unlock some of their home’s value, while they are still living in it, and, at the same time, provide the suppliers of this capital – investors and lenders – a good opportunity for risk-adjusted returns.”

Wealth in bank accounts

BondMason is also expecting the increased uncertainty and prospect of lower returns to cause many people to keep their money in the bank, instead of investments.

However, it warns that its research shows that this approach has been disastrous for many savers over the past ten years.

Findlay explains: “The combination of low interest rates and modest inflation means that putting money in the bank is actually the one investment strategy guaranteed to lose you money in real terms.

“Our research shows that a big problem stems from most people significantly underestimating the way inflation erodes the real value of their savings. For instance,if you had £10,000 in a zero-interest bank account then, over the past three years alone, it will have lost around £650 in value. About half of people interviewed thought the impact was substantially less, with nearly 10% mistakenly thinking inflation had no effect at all.”

He goes on: “This misconception means many people do not realise the extent to which inflation is steadily making them poorer. Even in the good times over the past ten years, many people have continued to keep a lot of money in the bank through uncertainty and inertia, rather than investing it after the financial crisis, and this has cost them at least £1,920 in real terms for every £10,000 of savings.”

Findlay concludes: “My message to the hundreds of thousands of people with unused cash languishing in the bank and unsure what to do with it is to instead speak to a financial adviser and also do your own research. Otherwise, if you leave it there another few years, you may well find the value of your savings has reduced even further through the hidden effects of inflation.”