Landlords increasingly turning to MUFBs in 2024

Professional landlords are increasingly adding multi-unit freehold blocks (MUFBs) into their portfolios, according to the latest internal data from Shawbrook, which has recorded a 14% increase in landlords looking to invest in this property type in 2024 compared to 2023.

Shawbrook’s internal data also showed a 37% increase in the value of the mortgages that landlords are applying for to support such purchases, indicating that landlords are targeting higher-value blocks while still maintaining good leverage ratios.

Scotland has been a particularly popular location for landlords seeking to invest in MUFBs, with mortgages agreed in principal doubling from 3.1% to 7.4%. Similarly, the North West has seen a 43% increase in the number of mortgages agreed in principal (5.3% to 7.5%). This is reflective of landlords looking to grow their portfolios, as MUFBs generate both diversified income streams and higher yields than a single unit can provide.

Daryl Norkett, director of real estate proposition at Shawbrook, commented: “Multi-unit freehold blocks are another attractive option for professional landlords looking to diversify their portfolios. MUFBs typically provide high rental yields, are in high demand, and tend to have a lower risk for void periods; all of which make them a popular choice for landlords.

“In fact, we’re seeing this trend towards higher-yielding property types across the board with landlords increasingly considering property types like houses in multiple occupation (HMOs) and semi commercial properties, which are similarly seeing a rise in activity due to their ability to provide a higher rental yield and shield against any economic challenges."