The Motley Fool

Forget buy-to-let! 3 property stocks I’d much rather buy today in an ISA

Flirting with the idea buy-to-let investing for the first time? Or thinking of expanding your existing property portfolio in 2020? Many individuals in these situations are finding it hard to decide right now, and it’s easy to see why.

Rents are rising, but so are costs. There’s a wealth of data out there describing how large numbers of landlords are thinking of exiting the sector entirely. But then there’s other news showing that buying activity is actually picking up.

Claim your FREE copy of The Motley Fool’s Bear Market Survival Guide.

Global stock markets may be reeling from the coronavirus, but you don’t have to face this down market alone. Help yourself to a FREE copy of The Motley Fool’s Bear Market Survival Guide and discover the five steps you can take right now to try and bolster your portfolio… including how you can aim to turn today’s market uncertainty to your advantage. Click here to claim your FREE copy now!

An improving market?

Latest research from Paragon Bank certainly suggests that buy-to-let is beginning to click through the gears again. Overall, mortgage brokers who took part in its FACT survey say that rental property accounted for 17.7% of total business in the fourth quarter of 2019, the highest figure for a year.

Naturally demand for remortgaging products commanded the lion’s share of fourth-quarter business (55%). But almost a quarter (or 24.5%) of buy-to-let mortgages were taken out for the purpose of portfolio extension, Paragon says. This was the highest level since the first quarter of 2017.

The data suggests that the market could improve further in 2020, too. One in five brokers said that they expect to introduce more buy-to-let business this year. Some 11% say that they expect to report less. And overall brokers expect to do 0.8% more business in 2020. This is the second quarterly increase in a row.

Stick with stocks!

Even if investor sentiment towards buy-to-let is indeed picking up it doesn’t necessarily mean that you should follow the herd. I for one don’t have plans to start building a property empire any time soon.

As I say, rents are indeed increasing but so are the colossal costs associated with the rental sector. Throw in the time and energy that modern landlords are expected to expound, as well as the high start-up costs, and investors here certainly have a lot on their plates. I’m much happier to invest my hard-earned cash in the stock market instead.

Study the market

There’s plenty of opportunity for would-be property investors to sate their appetites, too. Investing in the student accommodation market is one good theme to ride as the number of homegrown and international students booms.

Recent data from the Higher Education Statistics Agency shows the number of higher education students at UK establishments rose 2% in the 2018–19 academic year, to 2.38m. And this is being driven by the steady rise in overseas student numbers. These increased 6% in the last period to 485,645.

And there simply isn’t enough supply growth out there to cater for these ever-expanding numbers. This is why rents at the likes of GCP Student Living, Unite Group, and Empiric Student Property continue their long-term upswing. And it’s also why City analysts expect annual earnings at all these firms to keep growing by double-digit percentages over the next couple of years at least.

When there’s so much investment potential here, then, why bother with the troubled buy-to-let market?

A top stock with enormous growth potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business.

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has been helping it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 alone it returned a whopping £151.1m to shareholders in dividends and buybacks!

And here’s the really exciting part…

We think now could be the perfect time for you to start building your own stake in this exceptional business—especially given the two potentially lucrative expansion opportunities on the horizon that our analyst has highlighted.

Click here to claim your copy of this special report now — and we’ll tell you the name of this Top Growth Stock… free of charge!

Royston Wild 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.