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Flood of new buy-to-let deals

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02/10/2015
The number of buy-to-let mortgages on the market has reached a record high, rising 11% in the past three months.

Research by specialist broker firm Mortgages for Business found a record 953 products on the market. This is 11% higher than the previous quarter, the firm said.

A year ago there were 707 products targeted at landlords, meaning a 35% increase has occurred in the last 12 months.

But it wasn’t all good news for landlords. The average yield on each property fell by 0.8% in the last three months as tenants reach an affordability limit.

Your Mortgage reported last month how there is growing evidence that buy-to-let tenants cannot afford more rent rises, with landlords now limiting their increases.

David Whittaker, managing director of Mortgages for Business, said rent rises were falling behind rising property values.

“The number of new mortgages coming onto the market has rocketed in recent months. There is huge interest in mortgages suitable for limited companies as landlords take advice from their accountants.

“However, as rents fail to keep pace with racing property prices, yields are continuing to plateau. Returns on vanilla buy to let have now fallen to the 5% mark. Landlords with reasonable borrowing costs and a strong portfolio of these sorts of properties will still be making a solid income from such investments – but this changes the case for those considering new purchases.”

“With average yields on HMOs still nearer 10%, more complex property types are likely to attract a growing portion of new investment.”

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