Investors turn to commercial and HMOs for yields
Investors are increasingly looking at HMOs in addition to commercial and semi-commercial properties to expand their portfolios, research from Mortgages for Business has shown.
Three in 10 (28%) investors are considering purchasing HMOs in the next six months, up from just 10% six months ago.
Despite the cooling effect of the 3% stamp duty surcharge introduced on 1 April two in five (41%) investors are stil looking to expand their portfolios in the next six months, down from 46% in November.
David Whittaker, managing director of Mortgages for Business, said: “With higher yields it is no surprise that there has been a sizeable shift towards the more complex property types.
“The interest in commercial and semi-commercial property may have also grown as these asset classes do not incur the stamp duty surcharge imposed on residential property.”
The number of investors looking to purchase vanilla properties has fallen slightly to 79% from 83% in November.
But despite the buy-to-let changes just 14% want to shrink their portfolios, down from 18% in November 2015.
Nearly a third (30%) of investors said they owned a property in a limited company vehicle, up from just one in five (22%) a year ago.
Whittaker added: “We expect this figure to continue to rise in light of the pending tax changes which will peg relief on finance costs, including mortgage interest, to the basic rate of 20% to individual tax payers.
“Since the tax relief announcement we have seen a notable rise in limited company applications, which doesn’t show any sign of slowing down.”