Buy-to-let has generated a total return of nearly 1,400% since the scheme was launched in 1996.
That makes it the outstanding investment of the last 18 years, easily outstripping the other major asset classes, according to a new report by Wriglesworth Consultancy, sponsored by buy-to-let lender Landbay.
Every £1,000 invested in an average buy-to-let property purchased with a 75% LTV mortgage in the final quarter of 1996 would have been worth £14,897 by the final quarter of 2014, a compound annual return of 16.2%.
The same investment in UK commercial property would have grown to just £4,494, in gilts to £3,329, in UK equities to £3,119 and in cash to £1,959.
The returns are particularly strong because buying property with a mortgage is effectively leveraging, borrowing to invest, which accelerates returns in a booming market.
A buy-to-let purchaser buying entirely with cash instead would have seen each £1,000 invested grow to a relatively low £5,071 by the end of 2014, but that is still a compound annual return of 9.4%.
But an investor who regularly remortgaged to release equity to expand their portfolio more quickly would have turned £1,000 into an astonishing £34,732.
2014 was a good year for buy-to-let investors with property prices rising by an average 8.3%.
The index shows that mortgaged landlords achieved average returns of 18.3% for the year, of which 81.9% came from capital gains. The unmortgaged index achieved returns of 7.9%.
Rob Thomas, director of research at The Wriglesworth Consultancy and author of the report, said: "Our index should be invaluable for investors seeking to understand the relative performance of different investments over the longer term and shows the outstanding average returns enjoyed by buy-to-let investors over the past 18 years."
John Goodall, chief executive of Landbay, said: "The phenomenon of buy-to-let as an asset class only goes to underline the stable personal finances of landlords.
"The stability of returns shown in this paper underlines why this group of borrowers can be so attractive for lenders.
"In fact the history of buy-to-let can be viewed as a history of opportunity for those offering the financial backing to landlords."
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