taking advantage of a busy rental market

For many developers and investors, flipping a property has long been a way of making a profit, and quickly. However, with the rising cost of materials, a labour shortage and a potential cooling of the market, it can be increasingly hard to achieve the desired uplift. While a newly renovated property is still an attractive proposition to buyers wary of taking on any refurb commitments, there are alternatives to selling as soon as possible. The strength of the rental market has made letting out an investment property one such option.


a strong rental market

In April, Rightmove reported that rental demand across the UK increased by 6% in the first quarter of 2022 while available properties are down by 50% compared to last year. This lack of stock has had a direct impact on prices, with the average UK rent outside of London rising from £982 per calendar month to £1,088. Meanwhile in London, Rightmove reported the biggest annual jump of any region since records began, rising from £1,919 pcm to £2,193. In a reverse of fortunes for the capital’s rental market – which saw the average price of a room fall by 7% in the third quarter of 2020 – tenant demand is up by 81% in London with available properties down by 47% compared to 2019.


an opportunity for landlords

This presents an opportunity to take advantage of an extremely busy rental market by either holding onto existing assets or purchasing new investments with a view to letting them out – if only for a short amount of time. One factor that can’t be overlooked though is affordability. The Bank of England may be withdrawing the mortgage affordability test from 1st August, but as a landlord, you’ll still need to ensure you can cover a potential rental void. It’s worth remembering that lenders will generally require between 125% and 165% of the rental income. Therefore, it’s vital that you’re getting the maximum yield on any rental property. A light refurb could be the best way of achieving an uplift in rental value without incurring high building costs.

If you are considering a light refurb but don’t have the necessary funding in place, MT Finance can quickly provide a short-term fix to meet your needs.

In fact, we recently completed a bridging loan for a client in only 10 days. The client was the winning bidder on a residential auction property which they were intending to modernise before letting out. They had already paid a £50,000 deposit but urgently needed an additional £122,000 to complete the purchase and save their deposit. With their existing mortgage lender unable to issue a loan within the 28-day timeframe, they turned to us. Aware of the time constraints, our team issued an offer in principle and instructed the valuation and the solicitors on the same day.

Our ability to move at pace enabled us to issue an auction bridging loan of £122,000 at 65% loan-to-value in only 10 days. Interest was retained at 0.85% over a 12-month term. The bridging loan gave the client the capital they needed to complete the purchase and modernise the property while also saving their deposit. Once works are complete, they can refinance out of our bridging loan with a traditional buy-to-let mortgage.


fast and flexible

Here at MT Finance, we understand the need to move quickly and efficiently, and have tailored our bridging loans to suit a variety of different purposes. This includes our light refurb product which has been designed to meet the many diverse needs of property investors and landlords. Key features include:

  • 1st & 2nd charge loans
  • Loans from £50,000- £10,000,000
  • Up to 70% LTV
  • Terms from 1-24 months
  • Residential, commercial, & semi-commercial property
  • Adverse credit, CCJs, and arrears considered
  • No up-front fees, no exit fees, no ERCs
  • No credit scoring

If you would like to discuss a potential project or purchase with our team, they can be contacted online, via email or on 0203 051 2331.

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