With the property market in England reopening, buy-to-let (BTL) broker Mortgages for Business is advising landlords to refinance for capital to buy more property.
Commenting on the reopening of estate agents, conveyancers and removal firms, Steve Olejnik, managing director of Mortgages for Business, has said landlords should be poised to expand their portfolios, taking advantage of under-priced property, especially in London and the Home Counties.
Olejnik said: “We can’t know exactly what’s going to happen to the market, but we expect a temporary, short-term fall across London and the south east in the region of about 15%.
“But there’s no question that if you invest in bricks and mortar now, with a bit of haggling during the process, you are going to see a lot of long-term capital growth.
“I think values will be back at February 2020 levels by the spring or summer of next year.
“Landlords who have not asked for a repayment holiday will be well set to snap up some bargains with the help of lenders [which] have demonstrated a willingness to lend since the third or fourth week of the pandemic.”
Mortgages for Business has highlighted key areas in which landlords might be able to find bargains.
The first is in vanilla BTL properties that are going to be priced competitively; these yielded 5.7% on average last year.
The second is houses of multiple occupancy (HMOs), which currently have comparatively low mortgage rates.
5-year fixed rate mortgages on larger HMOs are currently between 3.5% and 4%, while lower rates are available on shorter terms as well as smaller HMO properties.
Last year, of all the different property investment options, HMOs produced the highest yields on average, at 9.2%.
Olejnik said: “Yields from the various types of property remained pretty steady throughout 2019 and suggest property will offer a better return than many other investments in the future – especially to smart, professional landlords looking outside the box at HMO investments.
“Talk to your broker now. If you want to grow your portfolio, you will want to build up a war chest when you next remortgage and should look to refinance for capital.”