Landlords are increasingly choosing to convert their properties into HMOs in response to tax hikes.
According to lender Roma Finance, more and more landlords are turning their buy-to-let properties into Houses in Multiple Occupation (HMOs) with a view to boosting rental yields.
In 2016, more landlords looked to convert their properties into HMOs than in any other year previously.
By carrying out a conversion like this, landlords can potentially increase income and yields, thereby mitigating the impact of tax hikes on their finances.
The buy-to-let market has been hit by a wave of new measures in recent years, including an extra stamp duty surcharge of 3%, and changes to buy-to-let tax relief on mortgage interest payments, which is due to be phased in from April this year.
Landlords have been looking for ways to make sure that these changes do not impact negatively on the income they receive from their buy-to-let property.
By converting an investment property into an HMO, landlords can rent the property out to more than one tenant, meaning that more rent can be collected to cover the tax increases.
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