The study was undertaken by HSBC which revealed that renovated buy to let property was more attractive to landlords despite costing an average of 43% or £58,500 more than a property needing renovation.
This is despite the fact that the average yield for a property that is ready to move into is just 1% higher than a property needing renovation.
Renovated property more attractive to landlords
The bank has also revealed that the most popular choice for a landlord looking to add to their portfolio is a two bedroom flat needing no renovation – with these properties in Leeds offering landlords the best returns.
Peter Dockar, the HSBC's head of mortgages, said: “Properties that are ready to move into are the preferred choice for a landlord since they avoid the need for expensive renovations and also result in higher yields.”
He added that while the purchase price may be higher initially, the rental returns are better which makes the monthly mortgage and maintenance costs more appetising.
Landlords struggle to expand their portfolio
However, the research also reveals that despite the potential for higher yields, many landlords looking to expand their portfolio cannot afford to buy refurbished property and so remain with a single property portfolio.
Most landlords claim they don't mind carrying out some DIY work if it means buying cheaper property but the overall renovation costs may put them off buying because it affects the property’s yield rate.
The bank says 43% of all landlords in the UK have a single property but nearly all of those are keen to expand and would choose a property that required little renovation work before tenants could move in.
Property Alert proves a success
Meanwhile, more than 12,000 people over the past six months have signed up to the Property Alert service created by the Land Registry.
The free service gives an early warning of suspicious activity on an address and is particularly useful for landlords.
The Land Registry says the system is a protection for landlords against being defrauded out of their property.
Alasdair Lewis, the Registry's director of legal services, said: “Property Alert is popular but there are still homeowners unaware of the risk from property fraud and how they can protect themselves.”
He urged those who have signed up to ‘spread the word’ to encourage more to join – and pointed to the potential for landlords who will be notified immediately of any suspicious activity that could see their property being transferred into someone else’s name.
