Landlords should consider terraced houses

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by Kay Murchie

According to the research by Paragon Mortgages, flats are the most popular property type favoured by investors making up 46% of the average landlord’s portfolio.

However, Paragon Mortgages, the buy-to-let mortgage lender, said terraced houses can provide the best returns for landlords.

Semi-detached homes make up 13% of landlords portfolio’s while detached properties were least popular making up 6%. Terraced houses make up 34%.

According to Paragons buy-to-let index, terraced houses are the highest yielding property type achieving yields of around 6.4%. Furthermore, these types of properties are often cheaper to purchase.

John Heron, managing director of Paragon Mortgages, said small terraced houses, flats and maisonettes are popular rental property types amongst certain tenant groups like young professionals and students.

Paragon added that there is a growing number of new build flats coming onto the market but investors need to be aware that they can often become the target of dishonest sales practices.

Landlords who believe the sales chat without doing their research can end up loaded down with overvalued properties that are difficult to find tenants for. The area and the property must be fully researched before diving in.

Mr Heron concluded by saying that flats can still be a good investment but landlords can not afford to take anything for granted.

A recent study by Birmingham Midshires established that 34% of landlords see the buy-to-let sector as a long-term investment opportunity.

However just last week, Kate Barker, the Bank of England housing guru, said increasing property prices have left the UK in danger of a considerable property downturn. She added that the buy-to-let market is heading for a slump and small-time property investors were ‘vulnerable’.