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Graham Awards


Buy To Let property profile changes as landlords diversify

Houses in Multiple Occupation are making up an increasing percentage of buy-to-let business, according specialist lender Shawbrook. 

In both 2022 and 2023, HMOs made up just over a quarter (27%) of all Shawbrook’s buy-to-let business. 

However, as landlords place further emphasis on diversifying portfolios, this number has already risen to more than a third (34%) in 2024. There has also been a rise in HMO business from non-portfolio landlords, from 17% to 21% over the same period.


Daryl Norkett, Director of Real Estate Proposition at Shawbrook, says: “As landlords have dealt with years of challenges stemming from the pandemic and culminating in the past couple of years of economic uncertainty, HMOs have proven to be a sound strategy for landlords looking to diversify their portfolios, as well as strong option for non-portfolio landlords entering the market.

“HMO rental yields are more easily able to afford mortgage lending in a higher interest rate environment, and the regular turnover of tenants allows landlords to stay on track with market rents.

“The option to reconfigure properties and the ability to turn lower yielding single lets into higher yielding HMOs has clearly been a strong draw over the past year or so, as landlords adjust their businesses to succeed in a tougher economic environment.

“We have already improved our HMO criteria to enable landlords to secure larger maximum loan sizes. And, whilst we have already seen a modest increase in HMO activity, once the predicted interest rate cuts finally arrive, we’d expect to see significant growth in this sector.”

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    Hmmm, I'm finding the returns are better now on single lets due to the cost of utilities, wear & tear, council tax, licensing, etc, etc. I know some landlords are finding exactly the same and converting back from HMOs.

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    Also, looking at the exit strategy on these properties, they are often not worth as much as a traditional, similar property and only sell to other HMO landlords. Possibly better for cash flow, but limited capital growth, especially the further north ones goes up the UK.


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