The property market in London, which has historically been the mecca for buy-to-let property investors, has slowed down since the Brexit vote and capital values in the city have been on a steady decline since 2016. Other parts of the country, however, seem to be more buoyant.
The focus of buy-to-let investors remaining in London seems to be moving away from capital values (bigger gains are now seen to be available elsewhere in the country) and more towards yields.
This has seen a big shift from typical buy-to-let investment away from typical houses and flats and more towards potentially higher yield investments, such as student lets and HMOs.
It may be that the appetite for capital returns in London may return when the market is perceived to have bottomed out and there are some bargains to be had.
In the meantime, we expect to see a continued pattern of fewer buy-to-let deals being done particularly in London, and an increased proportion of those being acquired through corporate vehicles. For the time being this pattern shows no sign of abating.
The fact remains, however, that buy-to-let mortgages continue to make up a substantial part of the UK property finance landscape. Buy-to-lets continue to be the right investment for many who have done the maths and are satisfied that the figures still ‘stack up’.
Commercial investment mortgages are for those looking to acquire or refinance a commercial property with a view to renting it out to commercial tenants.
For many property investors, having a healthy proportion of commercial properties is an essential part of a balanced portfolio. For others, perhaps those with a residential portfolio, the prospect of branching out into commercial is a daunting prospect.
However, with recent changes to the residential BTL market and a greater focus on yield-based (as opposed to capital-based) investments, we are seeing an increase in clients taking the leap into acquiring commercial premises.
Some potential benefits of commercial BTLs:
- Potentially higher yields
- A ‘clear’ rental stream, meaning that Tenants need to undertake maintenance or fully reimburse the Landlord for the cost of maintenance
- Potentially less initial capital expenditure to acquire the site.
If you are looking to acquire commercial premises through finance or looking to refinance your existing properties, it is essential that you have the right lawyer in your corner.