Complex Buy to Let Yields Reach New High

According to the latest Mortgages for Business Complex Buy To Let Index, the complex buy to let market continues to offer landlords and professional investors better average rates of return than mainstream ‘vanilla’ BTL properties.

HMO yields are at their highest ever level at 10.7% per annum and Semi-Commercial Property now averages yields of 7.3%. While average yields for Multi-Unit Freehold Blocks have fallen over the last quarter, now standing at 6.2% compared to 7.1%, this is due largely to a new product range being introduced by one lender designed to attract smaller properties.

Despite the relative strength of the complex BTL sector, average yields on mainstream ‘vanilla’ BTL properties have also grown over the first quarter of 2012 averaging yields of 6.3%, up from 6.1% last quarter, reflecting the buoyant demand for rental properties across the UK.

The average overall number of BTL products available over the quarter and the number of lenders operating in the sector has remained unchanged quarter on quarter. Over the last three months, an average of 25 lenders offered an average of 442 BTL products. However, on 23rd March, 472 BTL mortgage products were available – this is the highest number of ‘off-the-shelf’ products available so far in 2012.

David Whittaker commented:

“Complex buy to let properties are becoming increasingly attractive to landlords and professional investors. Average yields on HMOs for example eclipse even the most lucrative traditional rental house or flat and can provide investors with a diverse and robust portfolio.

"With the end of the first-time buyer stamp duty holiday likely to have a negative impact on the owner-occupier market and the government’s New Buy scheme unlikely to cover the shortfall, landlords and property investors will be relied upon even more in 2012.

"The good news for landlords, though, is that for those that look beyond mainstream buy to let, there are plenty of opportunities to grow their portfolios and push their businesses forward.”