The Motley Fool

Buy-to-let could be finished. Here are two FTSE 250 property stocks I’d consider instead

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.

Image source: Getty Images.

There have always been risks involved in property investment. For example, house prices don’t always go up, so a loss of capital is always possible. There are also risks from a tenant not paying rent on time, or at all, while void periods and the cost of maintenance can eat into profit for buy-to-let investors.

Now though, there are a number of additional threats facing the industry. Tax changes mean that mortgage interest costs cannot be offset against income for many property owners, which could lead to reduced profits and cash flow. Stamp duty has been increased for second homes, while it’s becoming more challenging to obtain a buy-to-let mortgage, due to more demanding affordability criteria.

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...

As such, now could be the right time to focus instead on property-related shares in the FTSE 100 and FTSE 250. They may offer less risk due to their increased diversity, as well as greater liquidity. And with their resilience potentially being higher than many buy-to-let investments, the risk/reward ratio may be relatively impressive over the long run.

Resilient growth

Two real estate investment trusts (REITs) which could offer long-term growth potential are Shaftesbury (LSE: SHB) and Great Portland Estates (LSE: GPOR). Both companies are focused on London, and especially the West End. They have decided to focus on what’s a relatively small area because of its track record of resilient performance during more challenging economic periods. It’s also usually seen more robust market values than many other parts of the UK. With Brexit coming up, this could prove to be a useful ally for property investors.

The West End, of course, also offers strong growth prospects. Crossrail is due to open in the coming months, and this is expected to increase the number of visitors to the area. This may lead to increased demand for retail space, while the availability of property in the locality remains low as a result of strict planning laws. This could mean that demand growth outstrips supply growth, thereby leading to relatively strong market values.


Given the potential risks from Brexit and the uncertainty it appears to have caused, Great Portland Estates and Shaftesbury seem to offer relatively wide margins of safety at the present time. The two stocks trade on price-to-book (P/B) ratios of 0.85 and 1.05, respectively. This suggests that they offer excellent value for money, and could deliver impressive capital growth over the coming years. And with both companies having a wide range of properties, they may come with less risk than buy-to-let investments.

As such, now could be the right time to focus on listed property companies, rather than buy-to-lets. Tax changes, mortgage availability and affordability issues among first-time buyers in particular could make the latter less appealing. Meanwhile, the former may deliver strong total returns, as well as lower risks, over the long term.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Peter Stephens has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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.