With gross rental yields reaching record lows of 4.38pc and rising interest rates massively increasing the cost of variable rate buy-to-let mortgages, landlords up and down the country are literally seeing their profits disappearing before their eyes.
Add in increasingly tighter regulations on private landlords and the truth is that buy-to-let now represents too big of a headache for many, with investors flocking to alternative options in their droves.
So, if you’re thinking of throwing in the towel, what buy-to-let alternatives should you be looking at?
A severe shortage in available social housing and the horrendous conditions many social tenants are being forced to live in means councils and social housing providers across the country are facing an uphill battle to provide decent homes to social tenants.
To help solve this huge issue, social housing providers and charities are looking to acquire private residential properties from investors on long-term full repair and insure leases.
For investors, social housing represents an attractive option thanks to the promise of high returns and a hassle-free, lucrative and stable investment.
As well as the huge demand, social housing is a hands-off investment type, with the housing association or charity typically taking care of all the maintenance of the property.
Given the surge in demand created by the pandemic and general shift towards online shopping, it’s little surprise to hear that eCommerce giants like Amazon, ASOS and eBay are doing extremely well at the moment.
This extraordinary demand has created a huge need for massive fulfilment centres, with Amazon alone reportedly leasing over 154 million square feet of warehouse space.
With the growth of eCommerce giants expected to continue long into the future, investing in eCommerce fulfilment centres could represent an exciting opportunity for investors looking to capitalise on this growth, promising strong demand and high rental returns.
Student accommodation is another popular alternative to buy-to-let, with a low entry to investment.
Student accommodation is another hands-free investment option. The management company typically manages the whole site and takes care of everything from the lettings through to maintenance and security.
There are a few drawbacks to consider, such as lower capital growth than would usually be expected from a buy-to-let.
In addition, investment in student accommodation also usually requires 100% cash upfront. With no financing available, this also limits the resale options since you will only be able to sell your asset on to a cash investor.
There are several different ways to invest in hotels, including purchasing a long-term lease of a hotel room and receiving a share of the annual income generated by the room.
Another option is to buy shares in companies that own hotel assets – or even buying a hotel outright.
Investing in hospitality may seem risky given everything we went through with Covid, but with the surge in demand seen once lockdown restrictions were lifted and the upwards trajectory of the sector, hotel investment could offer a good opportunity for investors.
Which Option is Right for Me?
Of course, these are just some of the most popular buy-to-let alternatives – and there are pros and cons to each.
As with any investment, the right option for you will very much depend on your individual circumstances. It is always necessary to do your due diligence, investigate each option carefully and speak to a professional where appropriate.
For more information on different investment options and to discuss your current position, please gives us a call or get in touch using our contact form.
Important note: The information provided in this article is general in nature and does not constitute personal financial advice. If you are unsure whether an investment is right for you, please seek professional advice. If you choose to invest, the value of your investment can both rise and fall so you may get back less than you put in.