Buy-to-let sees renewed interest from wealthy investors – London Wallet

A growing share of wealthy UK investors are putting money into buy-to-let property despite higher stamp duty on second homes, according to analysis from Rathbones.

The wealth manager said investors who have already used their ISA and pension allowances are increasingly turning to buy-to-let and tax-advantaged private company investments such as Venture Capital Trusts (VCTs) and the Enterprise Investment Scheme (EIS).

A survey of 3,092 UK adults with investable assets of up to £2.5m found investment behaviour shifts once tax-efficient options are exhausted. Among those with £25,000 to £250,000 of investable assets, 4% held buy-to-let property, compared with 35% of those with more than £2.5m. Use of VCTs and EIS rose from 2% at the lower end of the wealth scale to 25% among the wealthiest respondents.

Isabella Galliers-Pratt, senior investment director at Rathbones, said: “Once they’ve used ISA and pension allowances, the next question we hear from clients is: where does my next pound go? As wealth increases, investors are more willing and able to take on higher levels of risk. Greater financial resilience gives them the confidence to explore opportunities beyond mainstream wrappers.”

The research also indicates that the use of higher-risk alternative assets rises with wealth. Investments in peer-to-peer lending, cryptocurrencies, and unquoted shares increase from 5% among those with £25,000–£250,000 in investable assets to 14% for those with £500,000–£1m, and 25% among investors with more than £2.5m.

Holdings in taxable accounts, including shares, bonds, and funds, also grow with wealth, from 31% in the lowest bracket to 54% for investors with £250,000–£500,000, and 69% for those with £500,000–£1m.

Despite rising interest in higher-risk assets, cash remains a core part of UK portfolios. Between 94% and 97% of respondents across all wealth levels hold savings accounts or Premium Bonds.

Galliers-Pratt added: “The right route depends on time horizon, risk tolerance and personal tax circumstances. It’s important to balance the understandable desire to shelter investments from tax with the risks involved. Paying tax isn’t a bad thing – it typically means your investments have performed well.”