HMO properties produced the highest average rental yields last year, surpassing all other types of buy-to-let property.
According to data from Mortgages for Business, the average yields for landlords with HMOs was 8.9%.
The Mortgages for Business Sales Director, Jeni Browne, said: “Savvy landlords like to have a good mix of properties…They like the consistency of vanilla BTLs and the higher returns of more complex property types. Although lower than previously, 8.9% is still an excellent return for HMOs, not only when compared to vanilla buy-to-lets but also other, non-property assets.”
After HMOs, blocks of flats produced the highest average rental yields, at 8.1%. This compares to ‘vanilla’ properties, which last year averaged 5.7%
An HMO (houses in multiple occupation) is defined as a property which is rented by three or more tenants who are not directly related to one another but who share communal facilities, such as a kitchen and bathroom. HMOs can potentially offer higher returns for landlords as they are renting to more tenants within one property.
There has been a spike in the number of landlords letting out property as an HMO, as there continues to be a high demand in cities for affordable housing, and HMOs are generally a more affordable option for tenants.
More mortgage products are also available for HMO properties, with options for both limited companies and individual landlords.
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