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 Best Yields, Best Returns - HMOs prosper in volatile lettings market

Data published by specialist lender Precise Mortgages suggests that over a fifth of landlords are planning to expand their portfolio with the addition of at least one House in Multiple Occupation. 

It says HMOs are increasingly popular in the current volatile property market and wider economy because average rental yields are 6.3 per cent.

This contrasts with average yields for all property types, which fell 0.3 per cent in the second quarter of 2019 from 5.8 per cent to 5.5 per cent.


The most popular type of property to buy are terraced houses with 50 per cent of landlords planning to buy a terraced property; but the research claims 40 per cent of landlords also plan to sell terraced houses in the year ahead. 

However, only eight per cent of landlords holding HMOs in their portfolios plan to sell them.

Precise Mortgages says landlords holding 11 to 19 properties are earning the highest average yields at 5.9 per cent; typically these landlords will have an average of three different property types in their portfolio.

Precise Mortgages managing director Alan Cleary says: “In a time of market uncertainty, HMOs are an attractive option for professional landlords looking to maximise yields. As HMOs attract multiple tenancies, gross rental income tends to outstrip single lets meaning the rental income is more secure if one tenant leaves a void.

“The expansion of the HMO sector underlines how experienced landlords are rebalancing their portfolios. It also demonstrates the opportunity for brokers to work with specialist lenders who have expertise across the widest product set to support clients who are reassessing their portfolios.”


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