The comparison started from 1996 as this was the year the buy-to-let mortgage initiative was launched by the Association of Residential Letting Agents (ARLA) and buy-to-let mortgage lenders, opening residential rental property to ordinary investors.

Landbay has concluded that buy-to-let has been the outstanding investment of the past 18 years, providing average returns that easily outstrip those of other major asset classes.

Every £1,000 invested in an average buy-to-let property purchased with a 75% loan-to-value (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 £4,494; in gilts (UK government bonds) to £3,329; in UK equities (shares) to £3,119; and in cash to £1,959.

A buy-to-let purchaser buying entirely with cash would have seen each £1,000 invested grow to £5,071 by the end of 2014 – a compound annual return of 9.4%.

2014 saw property prices rising by an average 8.3% over the course of the year. The index shows that mortgaged landlords achieved average returns of 18.3% for the year, 81.9% of which was comprised on 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: “Last year for the first time we produced what we believe is the most detailed analysis of long term buy-to-let returns undertaken to date. Today we release the results updated for 2014 – meaning we have 18 years of comparative data on investment returns.

“It 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, added: “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.

“However – the bigger trend underlined here is the democratisation of such investments, which started a generation ago, and is far from complete. Buy-to-let itself is only one example of this shift. Now new models of peer-to-peer finance can give access to the returns involved in lending to such industries. Since 1996 ordinary investors have been able to be landlords, but now in 2015, ordinary investors can play the role of the bank.”