UK Landlords are investing in more complicated lets

Landlord Expert
By Landlord Expert February 2, 2015 21:32

Average yields on non-standard properties have continued to rise above buy-to-let investments, according to the latest Mortgages For Business research.

Multi-unit freehold blocks (MUFBs) have overtaken houses in multiple occupation (HMOs) and now provide landlords with the highest gross yield.

This was at 9.3% for the final three months in 2014, which is the highest yield on record for this property type.

HMOs have also seen rental yields rise, to 9% within the same period, from 8.9% in the third quarter of last year.

The only exception to this trend is semi-commercial property, which saw yields fall to 6.4% from a high of 9.7% in the third quarter.

Gross yields on the most straightforward buy-to-let schemes have returned towards the levels seen in early 2014.

For a standard rental property the equivalent figure is now 6.3%, up from 5.9% in the third quarter.

Mortgages For Business managing director David Whittaker said: "Rental yields for HMOs and MUFBs are typically higher than those for basic buy-to-let.

"For a multitude of reasons, not least stagnant wage growth for half a decade, many tenants simply can't afford an enormous flat with a spare bedroom.

"As such, the attraction for many of renting a room rather than a whole property will ensure there is a steady yield-boosting demand for HMOs over 2015."

"While property prices have slowed a little in recent months, landlords have, on the whole, seen enormous price growth compared to the indecisive direction of property prices a few years ago.

"Looking ahead, this might spur some landlords to expand their existing portfolios further and diversify as a result of the high yields on non-standard properties."

Landlord Expert
By Landlord Expert February 2, 2015 21:32

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