Buy-to-let repossessions up 40%! I’d rather spend £5k on this property stock for my ISA

Forget buy-to-let, this Fool says. He’d much rather spend his hard-earned pounds on this e-commerce hero.

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.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Buy-to-let isn’t the lucrative investment route it once was, but shocking new data from UK Finance has revealed just how challenging the business of residential lettings has become.

According to the body, there were a whopping 800 buy-to-let properties repossessed during the third quarter versus 570 a year earlier, a change which translates through to a 40% drop.

It’s true that this year-on-year jump was caused in part by a backlog of older cases being administered according to most recent regulatory requirements. However, it is clear that a number of landlords are finding themselves under an increasing amount of financial pressure and this is likely to have fed into that third-quarter hike. UK Finance says that some 4,500 buy-to-let mortgages were in arrears of 2.5% or more of the outstanding balance, up 5% on an annual basis.

Tough and getting tougher

Landlords have seen their returns and their rights take an almighty whack over the past few years, a result of government attempts to free up homes for first-time buyers by making conditions for buy-to-let investors more and more uncomfortable.

And if this general election has revealed anything it’s that things look set to get even tougher. The Conservatives have doubled down on their plans to scrap ‘no-fault’ evictions, making it harder for landlords to evict their tenants, while the implementation of rent caps forms a significant part of Labour’s plans for buy-to-let.

Quite why anyone would take a gamble with this increasingly-difficult investment segment is beyond me. If I had several thousand pounds sitting in a bank account waiting to be invested, I’d rather use that money to buy property-based stocks, ones which require much less maintenance. Indeed, if I had a spare £5,000 rattling around, I’d much rather use it to buy shares in Warehouse REIT (LSE: WHR).

A better property play

So what make this AIM-quoted share such a brilliant buy today? One word — e-commerce. Those companies owning and operating warehouses and so-called big box logistics spaces are hot property (pun fully intended) right now as more and more shoppers stay at home and order online instead of hitting the high street. It’s a major reason why private equity firm Sun European Partners made a bold takeover approach for Clipper Logistics late last week.

Half-year results from Warehouse REIT earlier this month showed just how business at such firms is flying right now. Revenues soared 27% in the six months to September to £13m, thanks in part to recent acquisition activity, while the value of its portfolio improved 0.6% on a like-for-like basis from March levels, to £438.7m.

And the business remains busy on the M&A trail to ride this increasingly-fertile environment. Thus City analysts expect it to follow a 1% profits rise in this financial year (to March 2020) with a 12% increase in fiscal 2021. Meanwhile, the firm’s pledge to pay another 6p per share dividend this year looks in great shape and is a figure which yields a monster 5.6% too. Great growth and big income? I’d happily buy shares in this AIM-quoted stock today.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Warehouse REIT. 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.

More on Investing Articles

Investing Articles

Is GSK a bargain now the share price is near 1,333p?

Biopharma company GSK looks like a decent stock to consider for the long term, so is today's lower share price…

Read more »

Snowing on Jubilee Gardens in London at dusk
Investing Articles

Could December be a great month to buy UK shares?

Christopher Ruane sees some possible reasons to look for shares to buy in December -- but he'll be using the…

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

Sticking to FTSE shares, I’d still aim for a £1,000 monthly passive income like this!

By investing in blue-chip FTSE shares with proven business models, our writer hopes he can build sizeable passive income streams…

Read more »

Growth Shares

BT shares? I think there are much better UK stocks for the long term

Over the long term, many UK stocks have performed much better than BT. Here’s a look at two companies that…

Read more »

British Pennies on a Pound Note
Investing Articles

After a 540% rise, could this penny share keep going?

This penny share has seen mixed fortunes in recent years. Our writer looks ahead to some potentially exciting developments in…

Read more »

Silhouette of a bull standing on top of a landscape with the sun setting behind it
Investing Articles

Is the S&P 500 going to 10,000 by 2030? This expert thinks so

One stock market strategist sees animal spirits taking hold and driving the S&P 500 index even higher by the end…

Read more »

Investing Articles

I’m expecting my Phoenix Group shares to give me a total return of 25% in 2025!

Phoenix Group shares have had a difficult few months but that doesn't worry Harvey Jones. He loves their 10%+ yield…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

14.5bn reasons why I think the Legal & General share price is at least 11% undervalued

According to our writer, the Legal & General share price doesn’t appear to reflect the underlying profitability of the business. 

Read more »