Are larger HMOs and MUFBs the solution to get landlords back in the market?

By Jason James, Corporate Account Manager

Do we need to do another intro outlining the current challenges facing individual and limited company landlords in today’s market? 

It feels like a bit of a well-trodden path, and I think we could all go with moving past it and looking forward to how landlords and property investors can continue to meet their ambitions, and at the same time: 

• Diversify their portfolio 
• Meet the record demand for rental properties
• Increase yields without passing increased mortgage rates onto tenants. 

Thinking big

After the challenging year we’re not talking about, thinking big might be the last thing safety-conscious landlords and investors might want to consider, but actually it is one they are in a good position to do. 

Last year and this year are busy remortgage years, and with a lot of landlords now on tracker products, this will continue to be a feature in the months to come.

What they can do is use these opportunities to leverage their properties to invest in expanding their portfolios. 

Why? 

Well it was reported in May that tenant demand is at an all time high, so while current mortgage rates can be off-putting, the demand for properties should calm any fears as landlords can be confident of finding willing occupants. 

The trick is to ensure the properties they invest in are resilient to further market changes, and can meet tenant demand without putting pressure on rents. 

HMOs and MUFBs

What do these properties offer landlords in this environment? 

• Diversification and reduction of risk with more sources of income in each property, rather than one family in one home
• A way to increase yields through multiple income sources
• Weathering the higher mortgage rates by spreading cost across multiple tenants, and passing on less cost to them.

Acquiring these properties ready made should be easier, as a recent zoopla report found 11% of properties on the market were ex-tenanted properties being sold by landlords who wished to exit the market. 

There’s also plenty of opportunity to generate more through acquisition and refurbishment bridging finance before remortgaging as a Buy-to-Let. 

We saw it recently with a refurbishment GDV deal we funded where an experienced landlord wanted to purchase an ex-commercial building to convert into four flats.

It feels like a simple story but one that is made simple by lenders who see the opportunity and are willing to back landlords through every step of the process to make it work.