The Motley Fool

Buy-to-let is dead but stock markets are alive and kicking

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

So farewell then, buy-to-let. The glory years are now gone. Like an ageing pop star you were adored by the masses but cut an increasingly sorry figure today, as once starry-eyed investors abandon you in droves. Did it have to end this way?

Burning down the house

Buy-to-let was one of the hottest investments of the last two decades but has fallen victim to its own success, after former Chancellor George Osborne spotted its cash cow potential. He also saw it as a vote winner: cracking down on amateur landlords allowed him to pose as the first-time buyer’s friend.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

The stamp duty surcharge, reduced wear and tear allowances, abolished higher rate mortgage interest tax relief, and the ban on letting agency fees have destroyed the financial case for investing in bricks and mortar. The results can be seen in the growing exodus of landlords from the market.

Another brick in the wall

Estate agents report an average of four landlords selling up per branch in March, up from three in February, according to new research from landlord association ARLA Propertymark. The rush of new buyers is also drying up, with buy-to-let purchases halving in the last year from 142,000 to just 70,000, figures from the Council of Mortgage Lenders show.

First-time buyers are celebrating, with registrations jumping nearly 20 per cent in April and almost 30 per cent in London, according to estate agency Haart. Investors should be celebrating too, because buy-to-let has been an expensive distraction.

Winner takes it all

Investing in property has one great advantage over stocks and shares, namely gearing, the ability to borrow to invest. In almost every other respect, investing wins. First, you can buy and sell stocks and shares in a matter of seconds, a process that takes months with property, which is highly illiquid and cannot be offloaded if prices are tumbling or you need money in a hurry.

Trading shares is also a lot cheaper. You can do it from £10 a pop, with minimal stamp duty of 0.5%, and platform fees. By contrast, property investors have to stump up stamp duty (£14,000 on a £300,000 property), plus conveyancing and mortgage arrangement fees, refurbishment and maintenance costs, and the expense of finding tenants (and clearing up after them).

Homeward bound

Stocks and shares also have the tax edge, as you can take all your returns free of income tax and capital gains tax, inside your £20,000 ISA allowance. You are liable to pay income tax on rents and capital gains tax on property growth, charged at a higher rate of 28%.

Best of all, stock markets have quietly thrashed the housing market. The Halifax house price index shows prices up just 3.5% over the last year, while the FTSE 100 grew a whopping 19.7%. The FTSE 100 rose 53% over five years against 36% for property, and 69% against 14% over 10 years, according to figures from Fidelity International.

Same old song

Better still, you can take those returns free of income and capital gains tax inside the annual £20,000 Isa allowance. After all these years, the stock market still has the best tunes.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.