Please Note: This Article is 5 years old. This increases the likelihood that some or all of it's content is now outdated.

Investment Strategy:

New figures from Mortgages for Business show that in Quarter One 2017 landlords, presumably in response to tax changes, are opting for cheaper property purchases and consequently smaller mortgages.

There’s also a trend towards buying more non-standard buy to lets in the form of more complex property purchases*. That’s according to the latest edition of the “Buy-to-Let index” produced by Mortgages for Business.

According to the MFB’s most recent report, the average loan amounts and secured values fell across all property types, with the figures for vanilla* buy-to-let (BTL) properties below any seen in the past year.

“…purchases saw a sharp increase in market share in the first quarter of 2017, most evidently among complex property types. Vanilla purchases were also slightly (c.3%) above the long-term trend, which is likely evidence of an ongoing process of incorporation via purchase transactions.

“Meanwhile, we have seen a marked drop in the average loan amount and property value across all property types, suggesting that landlords are refocusing this quarter on cheaper and complex properties to make the most of their capital.

“Q1 also saw the balance of the buy to let (BTL) mortgage market shift strongly towards purchases, with the effects observable across all properties. The change was particularly strong among complex property types, with purchases accounting for 41% of transactions involving multi-unit freehold blocks (MUFBs). This is up from less than 20% in the preceding two years,” says the (MfB) report.

See the Mortgages for Business index here

Commenting on the results, David Whittaker, CEO of Mortgages for Business said:

“These figures represent a departure from the established norms, which have been mostly defined by the re-mortgage market. This time, however, we see new and unusual purchase activity from landlords, presumably because incoming changes to income tax relief have prompted them to re-examine their strategies.”


Vanilla Buy to Lets – are standard buy to let transactions. Properties in this category tend to be normal 2-3 bed houses and flats. Both borrowers and properties fit the general lending criteria for off-the-shelf products offered by the mainstream buy to let lenders.

Houses in Multiple Occupation (HMOs) – are properties housing unrelated tenants having exclusive access to their rooms and share part of the accommodation, such as the kitchen or the bathroom. Examples include bedsit style housing or student shared housing. An HMO may require a licence based on the number of storeys and/or the number of tenants, depending on the local authority.

Multi-Unit Freehold Blocks (MUFBs) – are single buildings with multiple, separate, independent residential units owned under a single freehold title. Examples include purpose-built blocks of flats or Victorian houses converted into flats.

Semi-Commercial Properties –  are also known as mixed investments, as both names suggest these properties are made up of part commercial and part residential elements, typically shops or offices with flats above.

Please Note: This Article is 5 years old. This increases the likelihood that some or all of it's content is now outdated.


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