Landlords now have the widest choice of mortgage options on record – approaching 1,000.
As of Q3 2015, the number of buy-to-let mortgage products on the UK lending market stands at 953.
The figure marks an 11% increase since Q2, when the average number of mortgages on offer to landlords stood previously at 861.
On an annual basis this represents an increase of 35% compared to Q3 2014, when there were just 707 different buy-to-let mortgages to choose from.
Standard ‘vanilla’ buy-to-let properties already offer the lowest gross yield to landlords, but this has now dropped 0.8 percentage points in the space of three months, to 5.0%. On an annual basis, yields on vanilla properties have fallen further, by 0.9 percentage points since Q3 2014.
Similarly, between Q2 and Q3 2015, the yield on a multi-unit freehold blocks from 7.1% to 6.1%.
Compared to a year ago, when the average MUFB yield was 8.6% in Q3 2014, yields for such properties have seen a 2.5% tumble. However, at 6.1%, the absolute level remains considerably higher than for ‘vanilla’ properties.
Houses in multiple occupation (or HMOs) have seen yields perform comparably well. Between Q2 2015 and Q3 2015, HMO yields fell from 9.1% to 9.0%.
As well as more modest yields overall, this means the spread between the lowest yielding property type (vanilla) and the highest yielding (HMOs) has widened – to 4%.
David Whittaker managing director of Mortgages for Business, said: “The number of new mortgages coming onto the market has rocketed in recent months. There is huge interest in mortgages suitable for limited companies as landlords take advice from their accountants.
“Meanwhile, as rents fail to keep pace with racing property prices, yields are continuing to plateau. Returns on vanilla buy-to-let have now fallen to the 5% mark.
Landlords with reasonable borrowing costs and a strong portfolio of these sorts of properties will still be making a solid income from such investments – but this changes the case for those considering new purchases. With average yields on HMOs still nearer 10%, more complex property types are likely to attract a growing portion of new investment.”
