This information should not be interpreted as financial, tax or legal advice. Mortgage and loan rates are subject to change.
Category: mufb
A mortgage lender has revealed that Multi-Unit Freehold Blocks (MUFBs) are in demand among experienced landlords.
According to internal statistics from Shawbrook, 14% more landlords are investing in MUFBs in 2024 compared to the previous year.
Many landlords investing in MUFBs also seem to be targeting higher-value properties, evidenced by a 37% rise in the value of MUFB mortgages.
MUFBs explained
To give a brief summary of MUFBs, they are properties that have been split into multiple units which all remain under the same freehold title deed.
In many ways, they are similar to standard House in Multiple Occupation (HMO) properties, as they are both designed to house several tenants in one location. However, there are several key differences.
MUFBs are individual units with their own Assured Shorthold Tenancy (AST) agreements in place. Whereas HMO properties have amenities shared between tenants, MUFBs have separate bathrooms and kitchens for each tenant. In addition, it is usually the case that no licences are required for a landlord to set up an MUFB, unlike an HMO.
What’s the big appeal of MUFBs?
Having clearer boundaries between each section of a MUFB can be appealing because a landlord can decide to sell them all separately. They would only have to split the titles of each individual unit before doing so.
The fact that licences are not usually required means that there may be no hefty fees from the local authorities when a landlord wants to set up a MUFB.
Additionally, if a tenant decides to leave an MUFB at short notice, the landlord will be at reduced risk of void periods. Not having to scramble to find a replacement tenant can improve a landlord’s peace of mind.
Lastly, MUFBs generally offer high rental yields. So, in total, there are many possible reasons why more landlords are looking for MUFBs, beyond simply wanting to diversify their portfolios.
Where are MUFBs most popular?
MUFBs are most popular in Scotland and the Northwest of England. Following large increases in mortgages agreed in principal in both areas, landlords in other areas of the UK may feel inspired to invest in MUFBs.
Shawbrook’s director of real estate proposition, Daryl Norkett, has commented on the encouraging trend:
Multi-unit freehold blocks are another attractive option for professional landlords looking to diversify their portfolios.
MUFBs typically provide high rental yields, are in high demand, and tend to have a lower risk for void periods; all of which make them a popular choice for landlords.
In fact, we’re seeing this trend towards higher-yielding property types across the board with landlords increasingly considering property types like houses in multiple occupation (HMOs) and semi-commercial properties, which are similarly seeing a rise in activity due to their ability to provide a higher rental yield and shield against any economic challenges.
If you’re interested in hopping aboard the MUFB train, call one of our professional mortgage advisors today and they will be able to assist you in finding a suitable lender.
