Complex Buy To Let
Delivering satisfaction on diversification – Upton
Guest Author:
Alex Upton, managing director for specialist mortgages, Hampshire Trust BankDiversification is the word on every landlord’s lips right now, and for good reason.
At Hampshire Trust Bank (HTB), we’re seeing property investors keen to shake things up in their portfolios and embark on diversification.
But here’s the twist – they’re not sticking to the usual buy-to-let (BTL) properties. Instead, they’re setting their sights on more strategic investments like semi-commercial properties and houses in multiple occupation (HMOs).
It’s a smart move, but let’s be honest – the road to diversification can be a bit bumpy, especially when it comes to picking the right lender.
Getting serious about semi-commercial
Semi-commercial properties are catching the eye of savvy investors, and honestly, it’s no surprise.
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The potential yields here can often outshine those from traditional residential rentals. And let’s face it, who wouldn’t want to lock in stronger returns? But it’s not just about the numbers – there’s an added layer of security that makes these properties stand out. If your residential tenant moves on, you’ve still got income from the commercial side, and vice versa. It’s like having a built-in safety net, allowing you to weather any market shifts with ease.
For investors looking to balance risk with reward, semi-commercial is a no-brainer.
Let’s go for an HMO
The same logic is driving a surge in interest for HMOs. At HTB, we’ve seen a growing number of our landlord clients adding HMOs to their portfolios, and plenty more are exploring the idea.
It’s simple – HMOs spread the risk. If one tenant leaves, you’re not left hanging, because there are still others paying rent. It’s a straightforward way to boost security while ramping up those yields – precisely what any savvy investor is after.
Right now, the rental market is in a sweet spot. Tenant demand is off the charts – just look at the latest stats from Propertymark. We’re talking nine applicants for every rental property, and letting agents are juggling an average of 99 prospective tenants.
There’s a huge opportunity here for landlords.
Yes, it’s true – investors have had their share of challenges recently. They’ve been painted as the bad guys in the housing market for too long. And while recent government measures have put the rental sector under the spotlight, they’re mostly aimed at raising standards – something we can all get behind.
We all want a rental market that works for everyone.
And when it comes to housing supply, there’s optimism about ramping up housebuilding. But let’s not kid ourselves – we’ve been falling short on this for years, building far fewer homes than we need. The ambition is great, but housebuilding takes time, and we’re not going to see a flood of new homes anytime soon, especially with the current planning system dragging its feet.
That’s why the rental sector is more crucial than ever, giving landlords even more reason to feel confident about their investments.
The diversification challenge
Investing in traditional rental properties? That’s usually a straightforward process. Brokers know the drill – plenty of options, and things typically move smoothly (though we all know how that can go).
But when it comes to diversification into semi-commercial, HMOs, or other alternative property types, the story can be different.
Some lenders shy away from these deals, seeing them as too complex. They like their tick-box approach, and if a deal doesn’t fit neatly, they’re quick to put up barriers.
At HTB, we don’t see complexity as a problem – it’s an opportunity. It’s a chance to show that with a little creativity and a tailored approach, any challenge can be turned into a solution. For us, a challenge isn’t a reason to say no; it’s just a puzzle waiting to be solved.
With the right team and a flexible mindset, we’re not only able to say yes, but we can do it faster and smarter than most.
Landlords are right to diversify. A robust and resilient portfolio means thinking beyond the traditional two up, two down. But to make it happen, they need a lender who gets it – one who’s ready to help them succeed. Don’t let your client’s diversification plans hit a roadblock – partner with a lender who’s prepared to make it happen.