Published 21 May 2013 · Last reviewed 3 August 2013 · Older article — see current rates

How people are making money in the recession through investment in property with good Buy to Let Mortgage Advice

Let me start this article by pointing out that I do have a small modest Buy to Let portfolio myself but unlike some Buy to Let mortgage brokers I don’t want to portray myself as the Oracle of how to invest in Buy to Let properties and then try to flog a load of mortgages off the back of it on some moody new build properties that’s not the sort of Buy to Let mortgage advice I give to my clients. If you have experienced a ‘seminar’ then you know what I’m talking about.

I just wanted to give you an insight into what I’m seeing from our view point, a small and successful mortgage brokerage specialising in the Buy to Let market based in London, but dealing nationwide across all sorts of different projects.

I have seen a massive shift from prime Central London areas for investment to Outer London boroughs where Buy to Let landlords are seeing larger returns on their investments due to population growth. The Outer London areas have a greater stock choice and the typical Buy to Let mortgage activity is around the £250,000 to £500,000 property price mark.  Buy to Let mortgages lenders are also coveting clients at this level so there is ample competition to ensure we can get you a best Buy to Let mortgage rate.

Now don’t get me wrong I believe there are still some huge advantages within the Central London property market. I still believe that it is one of the soundest investments you can make globally and this is backed up by the level of foreign investment within the Buy to Let property sector in Central London. However, unless you have a very good existing portfolio or a large deposit it’s very hard to make it work. Larger loan Buy to Let mortgages is much more complicated due to the sums of money involved and the added risk of concentrating on a smaller number of properties rather than a large diversified portfolio. That said, the returns can be significant and long-lasting, and as we are based in London Victoria we have naturally attracted many successful high end Central London property market investors. The key is picking the right property and tailoring your finance approach to each investment, and of course doing your sums to take into account any refurbishment, lease extension or licencing. We can help you on all aspects of Buy to Let advice if you are unsure.

Clients are also buying up properties in large student towns at good prices for multi-let (Houses in Multiple Occupation, HMOs) taking advantage of the over exposed landlords who are exiting at the thought in the raise in tuition fees. For our part, we have seen no dwindling in the rental yields as sharing digs appears to be part and parcel of the modern university life. The boom area is Buy to Let Landlords who are buying large properties, seeing the potential for multi-let (HMOs) and converting them. A typical example would be a town house which is split up into four or five self-contained flats or studios with communal bathrooms and kitchens. These types of projects require specialist development finance and brokerage supervision, as the lenders simply do not exist on the high street, and the project needs care and attention in its presentation for the specialist lenders.   Most specialist lenders base their assessment on letting experience but we can provide best Buy to Let Mortgage advice and solutions for first time landlords who want to enter the HMO and student markets.

The brave and bold might want to go against the Buy to Let market trends I mentioned above. The key to all riskier investments is to have the necessary reserves to minimise the risk and to have in place a plan for the downsides as well as the expected rental and capital returns. For instance, a pot of finance available for the refurb to make the property ready to let; significant rental return to not be concerned about onward sale and capital appreciation if the property is of un-mortgagable construction or undesireable area; contingency plan through portfolio cross-subsidy or insurance for the months it is not let.

At Niche I work with all different types of Buy to Let landlords and as such provide a wide range of advice and solutions for people investing in property. One thing’s for sure there is a reason why professional landlords often deal with specialist Buy to Let brokers and that’s because in the long term we can add real value and they also understand that good advice does cost but it can also be offset against costs.

Payam Azadi is a partner at Niche Advice Ltd who are Independent Financial and Mortgage Advisers in London.