HMO and multi-unit landlords achieving highest rental yields

Landlords with portfolios comprising houses in multiple occupation (HMOs) and multi-unit freehold blocks (MUFBs) are achieving the highest rental yields, according to the latest study.

Research from Precise Mortgages has revealed that average rental yields for HMOs were the highest across all types of property at 7.1%, 1.3 percentage points higher than the market average.

Yields for MUFBs were the second highest at 6%, which highlighted the opportunities for landlords to refocus their portfolios.

Across all property sectors, average yields dropped slightly in Q1 2018 to 5.8% from the 5.9% reported in Q4 2017, and were now at the same level as Q1 2017.

The highest average yields of 6.7% were achieved on portfolios of between 11 and 19 properties.

With regards to regions, landlords with portfolios in the North West reported the highest rental yields at 6.7%, while central London portfolios recorded the lowest average yields at 4.8%.

“As HMOs attract multiple tenancies, gross rental income tends to outstrip single lets and rental income is more secure even if one tenant leaves a void,” said Alan Cleary, managing director at Precise Mortgages (pictured above).

“Experienced landlords are looking to rebalance their portfolios and there is a real opportunity for brokers to support them to work with specialist lenders who are prepared to be flexible and have expertise across the widest product set.”

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