Landlords are looking for cheaper properties with higher yields

Property investors are looking to add cheaper properties with higher yields to their portfolio, a new research has found.

According to a buy-to-let index put together by Mortgages for Business landlords have spent their time over the last quarter looking for high-performing options when considering any investment property purchase.

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An analysis of all mortgages arranged during Q2 of 2017 shows that all buy-to-let properties purchased during that time have had a much lower values than the average overall.

The buy-to-let index explained that lower value properties offered better returns for the landlords on their investment, as HMO and multi-unit purchases both achieve yields of more than 10%.

Steve Olejnik is Mortgage for Business’s chief operating officer and commented the findings:

“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.”

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The research pointed out that as a consequence following this very selective approach to property purchasing investment rates have dropped slightly. This year’s second quarter has seen fewer buy-to-let purchases than Q1 2017.

Semi-commercial property was the only investment type that experienced an increase in sale activity, as purchases are now making up 67% of quarterly mortgage transactions for this kind of real estate. As this, however, is a less common form of property investment, the report deemed the collected data as not sufficient enough to have a major impact.

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