Following the reopening of the property market on May 13, a specialist buy-to-let mortgage broker is advising investors to expand their portfolios with under-priced bargains.
Mortgages for Business says that landlords should have a particular focus on the markets in London and the Home Counties.
Last week, following a period of inactivity, the government announced that England's housing market could restart. In-person viewings can be carried out, while estate agents, removals firms and conveyancers can reopen for business.
All activity must follow government guidance and social distancing requirements, while virtual viewings and avoiding contact where necessary are still being advised.
The managing director of Mortgages for Business, Steve Olejnik, predicts that property values will dip by around 15% across London and the South East in the short-term.
"There’s no question that if you invest in bricks and mortar now, with a bit of haggling during the process, you are going to see a lot of long-term capital growth," he says.
"I think values will be back at February 2020 levels by the spring or summer of next year."
Olejnik says that landlords who have not requested a mortgage repayment holiday will be in a good position to acquire property with the help of lenders who have demonstrated a willingness to lend since the third or fourth week of lockdown.
The specialist mortgage broker has identified two specific market areas where investors can pick up bargains.
The first is vanilla BTL properties, which yielded 5.7% on average in 2019.
The second is Houses in Multiple Occupation (HMOs). Mortgages for Business says HMO mortgages have comparatively low rates, with five-year fixed products on larger HMOs currently sitting at between 3.5% and 4%. It says that even lower rates are available on short-term deals and smaller HMO properties.
Last year, of all the different property investment options, HMOs produced the highest yields on average at 9.2%.
"Yields from the various types of property remained pretty steady throughout 2019 and suggest property will offer a better return than many other investments in the future – especially to smart, professional landlords looking outside the box at HMO investments," continues Olejnik.
He urges investors to speak to their brokers now.
"If you want to grow your portfolio, you will want to build up a war chest when you next remortgage and should look to refinance for capital."