THE PROP­ERTY EX­PERT

Harefield Gazette - - UXBRIDGE PROPERTY -

MANY HAPPY RE­TURNS, BUY-TO-LET!

in­ter­est­ing ar ticle in the re­cently cov­ered which types of proper ty give the big­gest re­turns, and re­vealed that the con­tro­ver­sial – but lu­cra­tive – tac­tic of di­vid­ing up fam­ily homes into bed­sits or ‘houses of mul­ti­ple oc­cu­pa­tion’ (HMO) is no longer the big­gest earner in buy-to-let.

The so-called ‘multi-unit free­hold blocks’ which in­volve buy­ing a block of flats or a con­ver ting a build­ing into apar tments, earned in­vestors 9.3% in gross rental yields be­tween and De­cem­ber 2014. By con­trast, HMOs earned 9% in the same pe­riod; not a large dif­fer­ence it must be said.

Th­ese yield fig­ures – based on thou­sands of trans­ac­tions made since 2011 through lead­ing buy-to-let bro­ker Mor tgages for Busi­ness – are ‘gross’.That means they don’t take into ac­count costs such as ser vic­ing a mor tgage, main­te­nance, ground rent, or add-ons such as let­ting agent fees and in­come tax.

In­vest­ing in blocks of flats isn’t ex­actly cheap, with prices star ting at around £500k for an eight-apar tment build­ing in a city out­side Lon­don and £4m for the same size build­ing in cen­tral Lon­don.

How­ever, the av­er­age buyer’s bud­get for a block of flats has fallen in re­cent years. In early 2011 the av­er­age proper ty price was £932,148 with a 44% de­posit, now in­vestors pay £497,644 on av­er­age with a 36% de­posit.

Di­vid­ing up proper ties for mul­ti­ple oc­cu­pants, where ten­ants share a living space but hold sep­a­rate rental agree­ments, yields 1.4% lower than at the same point last year.

Multi-unit flats are lu­cra­tive be­caus of the ‘economies of scale’ and there­fore may only ben­e­fit high value in­vestors.

Ex­per ts say that HMO will con­tinu strong per­for­mance, and that rental yields are higher than more tra­di­tiona buy-to-lets, but re­turns have slipped over the past year. How­ever, it re­main popular with high de­mand from ten­ants and for the year ahead buy-to-let in­vestors are con­fi­dent tha HMOs will pro­duce the best in­come

you be con­sid­er­ing buy-to-let – or mov­ing, let­ting or rent­ing – pop in to see us for an in­for­mal chat and a warm wel­come.

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