The Property Podcast ASK506: Does this cash buy make sense? PLUS: How much should I increase the rent?
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Jan 13, 2026 Ed, a prospective property investor, shares his dilemma about a discounted two-bedroom flat in Kent above shops, which has mortgageability issues but boasts an attractive rental yield of 11%. The hosts discuss the risks of cash-buying such properties, highlighting potential challenges with future valuations and remortgaging. Meanwhile, Paul navigates the tricky situation of renewing a lease for his long-term tenant, with market rents significantly higher. The discussion emphasizes a fair approach to rent increases, using market data and phased strategies.
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Avoid Unmortgageable Flats Above Shops
- Avoid buying flats above shops if you need mortgage leverage or easy resale prospects.
- Expand your search radius to access mortgageable deals that use leverage and improve returns.
Don't Lock Cash In Unleverageable Deals
- Do not buy an unmortgageable property in cash if you plan to rely on future remortgages.
- Use leverage on investments to scale your portfolio instead of tying up cash in difficult-to-finance assets.
Discounts Reflect Structural Resale Risk
- The discount on a flat above shops reflects a structural risk, not a bargain.
- Reduced capital values stem from limited buyer demand and difficult future mortgages.