Property investors who were in at the start of the buy to let boom have piled up £12,000 from every £1,000 pumped into their portfolios, according to new research.
Buy to let has also outperformed every other asset class for investors since lenders launched the first property investment mortgages in 1996.
Paragon Mortgages, a specialist landlord lender, has revealed that over the 18 years of buy to let the return on investment has been 16.3% a year.
Over the same time, yields from equities hit 6.8% a year; bonds returned 6.5% and putting cash in the bank produced just 4%.
The firm’s research also expects landlords to keep earning yields of 11% for the foreseeable future.
The report also reveals how much buy to let has become part of the fabric of the housing market.
Since 1996, banks, building societies and specialist lenders have agreed mortgages worth nearly £175 billion against 1.5 million private rental homes.
In today’s market, one in seven mortgages go to buy to let landlords.
Paragon director John Heron said: “Buy-to-let mortgages have become such an integral part of today’s mortgage market that you easily forget that the product didn’t exist prior to 1996. The private-rented sector remains an important and growing sector and now represents 18% of the UK’s housing market.”
Not everyone is in favour of the spread to buy to let.
Housing charity Shelter regular castigates landlords for taking advantage of tenants and supplying property with poor living conditions.
The charity is supported by Alex Hilton, director of Generation Rent, set up to represent the nation’s 9 million private and social housing tenants.
“While a 16.3% annual profit makes the buy-to-let market a lucrative investment for landlords, it drives up rents and kills the dream of home ownership for millions of tenants,” he said.
“Other recent research showed that a third of tenants are cutting back on food and two fifths are cutting back on heating – just so they can pay their rents.”
Another survey from Scottish Widows found renters have to save for 15 years to buy a home. Most tenants save just over £2,000 a year, said the report, but the average deposit is £31,000.