A specialist mortgage broker is suggesting that this is the right time for buy to let investors to bag bargain properties, especially in London and the Home Counties.
He says this is because prices have dropped during the lockdown.
“We expect a temporary, short-term fall across London and the south east in the region of about 15 per cent. 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” claims Steve Olejnik, managing director of Mortgages for Business.
“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 who have demonstrated a willingness to lend since the third or fourth week of the pandemic.”
Mortgages for Business says bargains are likely to be found in two categories of property.
The first area is ‘vanilla’ buy to let properties that are going to be priced very competitively - last year, such properties yielded 5.7 per cent on average in 2019.
The second area is HMOs.
Mortgages for HMOs have comparatively low mortgage rates currently with five-year fixed rate mortgages available on larger HMOs at between 3.5 and 4.0 per cent with lower rates 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 – 9.2 per cent.
Olejnik adds: “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.”