Landlords are being more selective with the properties they purchase to let, choosing lower value properties which they anticipate will offer strong yields.
The latest Complex Buy-to-let Index from Mortgages for Business reveals that in the second quarter of this year, landlords increasingly looked to purchase far more affordable properties, properties they consider to be ‘higher-performing’, and giving a good return on investment.
HMOs are just one of the options landlords have been turning to as a means of securing good rental returns while reducing the risk of voids.
COO of Mortgages for Business, Steve Olejnik, said: “Landlords have been selective with their purchases this quarter, choosing properties that maximise their income with minimal investment.”
“This strategy is likely to remain common as it allows landlords to maintain profitability while HMRC phases in restrictions on income tax relief for landlords.”
Mortgage interest tax relief changes are being phased in over a number of years. These first took effect in April 2017.
The changes relate to individual landlords who receive an income on a residential property in the UK, limiting the amount of relief they can claim on finance costs to the basic rate of Income Tax.
This research from Mortgages for Business shows that landlords are finding ways to deal with the changes in a bid to hold onto their profits.
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