23rd
Jul 2017
The latest report from a mortgage broker states that overall UK landlords prefer to buy lower value properties to add to their portfolios, as they have proven to yield higher profits.
The firm's latest very detailed buy-to-let index shows that landlords are continuing to purchase these types of properties, no matter how 'unfashionable', for their higher yield potential which of course makes perfect sense.
Their analysis of the buy-to-let market shows that during April to June the majority of BTL mortgages arranged had much lower value than the UK average.
Figures from the report show that cheaper HMO and multi-unit purchases should give landlords the chance of achieving average yields of 10% and in some cases more. However yields will drop to 8.7% (HMOs) and 7.9% (multi unit) if remortgaging transactions were included.
Steve Olejnik, chief operating officer of the company, said: "Landlords have been selective with their purchases this quarter, choosing properties that maximise their income with minimal investment. This strategy is likely to remain common as it allows landlords to maintain profitability while HMRC phases in restrictions on income tax relief for landlords."
The firm believes that one of the main factors in landlords being more selective to the property price type is that during the first three months they have reduced their planned investment and in the second quarter there has been a fall in buy-to-let activity compared to the first quarter.
The only area that had a higher activity was in semi-commercial properties, however it was gleaned too small to change the overall state of the BTL market. The firm also said that their figures show that loan to values remained the same throughout the first quarter, although multi-unit properties had a modest reduction of 4%.
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