LendInvest has seen more landlords looking at houses in multiple occupation (HMOs) and multi-unit freehold blocks (MUFBs) to safeguard their income in adverse market conditions.
The alternative mortgage lender said these types of properties tend to have high yields, so losing the income from one or two tenants does not necessarily put a landlord at risk of no longer meeting their mortgage commitments in the same way that losing the income from a single-let property would.
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LendInvest said that landlords looking to expand their portfolios need to understand the current market conditions.
The buy-to-let, bridging and development lender said that a broad range of HMO and MUFB options with higher loan-to-values (LTVs) and loan sizes would be best for those looking for greater protection against potential losses of rental income,
“We anticipate – and have seen – a growing appetite for these larger properties as a way for landlords to better protect their investments and livelihoods as we continue to navigate these uncertain times and be better insulated against that risk in the future,” LendInvest said in a blog on its website.
LendInvest said that it is seeing a lot of interest and activity in its bridge-to-let proposition as HMOs and MUFBs offer more security, with landlords remodelling larger properties into small HMOs and converting larger HMOs into MUFBs.
Similarly, LendInvest has seen landlords join a number of rooms together for a self-contained flat to attract families.
“There has been a lot of press around people no longer needing to live so close to a city for their work, so landlords are already adapting by turning sizeable single room rent payments into a roomy flat or home for families,” the lender said in the blog.
“Also, this new working and family environment means landlords can adapt ambitions to meet these needs as more renters look to move out of cities. In the face of these market conditions, landlords able to adapt will fare well.”
Last week, LendInvest updated its buy-to-let range, including its HMO and MUFB products.