Buy-to-let or stocks: which could grow your money faster?

Property rental and stock-market investing are both widely used for long-term wealth building. But which option offers the stronger potential return?

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Property investment has remained popular since the first buy-to-let (BTL) mortgages appeared 30 years ago. Landlords can earn rental income while their properties increase in value.

Buying a home was far cheaper when BTL mortgages first arrived. In 1996, the average property cost 54,900; after adjusting for inflation, that equals roughly 114,400 today.

That figure sits well below the UK's current average house price, which HM Land Registry puts at just over 270,000.

It gave middle-class investors a way to own a stake in property when buying an entire home was beyond their reach.

The returns earned by BTL landlords during that period outperformed the stock market.

Hamptons estate agency research finds that landlords who bought to let over the past 30 years achieved average returns of 2,130%. A 1 investment made in 1996 is now worth 22.30.

Every 1 invested in the S&P 500, the flagship US index, in September 1996 had grown to 22.05 by September 2026 - a 2,105% gain over 30 years, assuming dividends were reinvested.

On paper, buy-to-let produced greater growth than the S&P 500. The difference was only 25 percentage points, though, and landlords had to put in considerably more work to earn it.

Buy-to-let returns have historically outpaced stock markets

Buy-to-let only narrowly outperformed an investment in the S&P 500, but the difference is far wider when compared with other stock market measures.

Since 1996, the FTSE 100 - made up of 100 of the biggest companies listed on the London Stock Exchange - has returned just 796%.

A 1 investment in the FTSE 100 in 1996 would now be worth 8.96, compared with 22.30 if it had gone into BTL.

Gold performed even worse by comparison. That same 1 invested 30 years ago would be worth only 7.36 today - less than a third of the BTL return.

During that period, tenant rent accounted for 62% of total BTL returns. The other 38% came from property price growth, according to Hamptons analysis.

Stock markets now offer faster growth than BTL

BTL delivered higher returns than the stock market over the past 30 years, but that pattern has reversed in recent years.

Over the past five years, residential buy-to-let delivered cumulative returns of just 41%. The S&P 500 returned 75%, while the FTSE 100 gained 73%.

Landlords now earn considerably less than they once did, particularly those only entering the buy-to-let market today.

The Renters Rights Act has shifted more power to tenants, leaving landlords with a heavier set of regulatory duties.

House prices have barely moved in recent years. They surged during the pandemic, then fell back, with growth turning negative in both 2023 and 2024.

Is becoming a buy-to-let landlord worthwhile?

Over the past 30 years, renting out property has delivered better average returns than the stock market. It also demands considerably more time and effort.

Putting money into a low-cost index fund requires little time or effort: place it in an ISA and leave it alone. Being a landlord takes far more work.

Without paying a property management agency, landlords must handle the day-to-day work themselves - from repairing broken appliances to arranging a cleaning before new tenants arrive. They also face the risk of ending up with tenants who damage the flat.

A small property portfolio may be easy enough to handle, but renting out several homes can soon demand your full attention.

That is before repair bills or renovation costs enter the picture. If a tenant leaves and the property sits empty, the rental income stops.

James Mackreides, deputy digital editor at BFIA, said: "If you're deciding between a buy-to-let property and putting the money into the stock market, remember to account for the additional costs."

Landlords must keep the property habitable and have money set aside for surprise repairs. They may also face vacant periods with no rental income. The market became more difficult after the new Renters' Rights Act rules took effect in May 2026.

By contrast, buying stocks takes little money or effort, though you can still lose it.