Buy-to-let landlords favouring HMOs for higher yields 

 

Opting for a house in multiple occupation (HMO) can bring in better yields for landlords than traditional lets, and many are factoring this into their future plans.

A landlord survey by Precise Mortgages has revealed that over a fifth of today’s landlords are seeking to add an HMO to their property portfolio. According to the data, only 8% of HMO landlords are planning to sell, compared to 40% of landlords planning to offload terraced properties from their portfolios.

HMO properties have become more lucrative than standard single let rental properties, particularly in UK cities with a significant student and young professional population. Many landlords have been hit by the tax changes of the past few years including the 3% stamp duty surcharge and Section 24 tax relief changes, so it’s no surprise that landlords are attracted to HMOs, where the average rental yield for April-June this year was 6.3%, as opposed to the market average of 5.5%.

Rebalancing portfolios

“HMOs are an attractive option for professional landlords looking to maximise yields at a time of market uncertainty,” said Alan Cleary, managing director of Precise Mortgages. “The expansion of the HMO sector underlines how experienced landlords are rebalancing their portfolios.”

The expanding HMO sector is evidence that landlords are rebalancing their portfolios. Not only can a well-managed HMO property deliver better yields, but it also comes with less risk, as multiple tenants mean less of a financial impact if one decides to leave.

Getting the most out of an HMO

The highest average yields among landlords was reported in the north-west at 5.9%, with cities such as Manchester, Liverpool, Preston and Bolton offering great returns at relatively lower price points than the pricier south of the country.

While they can be slightly more complicated to run, with licensing requirements and minimum room sizes being brought in in recent years, they can be a great option in university towns and other student heavy areas as young professionals and graduates continue to opt for shared houses as a way of saving money while living in their first choice of area.

To read more about the pros and cons of HMOs, as well as additional factors to bear in mind when investing in one, read our guide.

Highgrove Mews

High Net Yield Freehold Houses

  • Commutable to London (27 mins to central Paddington station)
  • Rental demand extremely strong with large industry presence in Reading
  • Freehold with 4% net yield

£284,955 - £457,000

St Petersgate – Stockport Manchester

New Launch - Stockport Manchester, apartments from £160,000

  • Discounted launch prices from £160,000
  • Excellent transport links with 3 trains per hour to London Euston and only 9 mins journey to Manchester Piccadilly
  • Experienced development team

Assured Rent Housing Association Leases

Assured Rent Housing Association Leases

  • Assured rent & no rental voids
  • Tenant damage cover & newly refurbished inline with requirements of a corporate sitting tenant
  • Free property and lettings management

From £62,000

Emerging Birmingham Commuter Town With Properties From Just £104,000

The emerging Birmingham commuter town where properties are selling in an average of just 24 days

  • A collection of 62 two bedroom apartments and 28 one bedroom apartments.
  • DE14 is one of the fastest selling postcodes in the West Midlands.
  • 23 minute train journey into Birmingham New Street Station.

Properties from £104,000

Mill, Stockport

The Northwest's emerging property hotspot

  • Discounted off-plan 2-bed prices from £162,000
  • Completion date - Q4 2021
  • Rental yields - 6% plus

Discounted off-plan 2-bed prices from £162,000

South Central – Birmingham City Centre Apartments

Highly anticipated 28 storey launch in Birmingham City Centre with an impressive roof garden and communal facilities.

  • 154 units across 28 storeys
  • Residential multi-media community room, gym, roof garden and sky cinema
  • Excellent future connectivity via the metro system to other key transport hubs and locations around the city

from £205,800

ba-

Talk to us

Speak to our UK property experts today: 

+44 (0) 333 123 0320

Open from 9am-6pm GMT

+852 9865 4446

Open from 9am-6pm HKT

Stamp Duty Calculator

.

Unlock members only investment opportunities and full development details. Join now – it’s free, quick and easy.

Login

Not a member? Sign up for free

HMO

Buy-to-let landlords favouring HMOs for higher yields 

Example

By submitting your details via this online form you agree to be contacted via email/phone/SMS by Direct Marketplace Ltd t/a BuyAssociation in relation to property investment and property developments . We do not share your personal details with third parties.  To view our full Privacy Policy click here.