Potential to earn high yields with HMO property investments

More investors planning to purchase HMO property investments

Over the next 12 months, UK property investors are planning to purchase HMO property investments more than any other investment type, according to research from the bank Paragon. Paragon’s Q4 2019 PRS Trends report revealed that out of the landlords who are planning to acquire a property in the next year, 31% plan to buy HMOs. This is the highest percentage since Q2 2017 and has grown from 12% only three months earlier. 


A quarter of landlords stated they plan to purchase flats, and 18% said they are targeting terraced housing. Additionally, out of portfolio landlords or investors, considered those who have four or more properties, 9% plan to increase their portfolio in the next quarter.


Richard Rowntree, director of mortgages at Paragon, stated: “The private rented sector needs to grow to meet increasing levels of tenant demand and it’s clear that portfolio landlords will drive that growth. Not only are they looking to build their portfolios, they are also looking at more complex types of property that will deliver higher yields, such as HMOs.”


Higher yields


HMO property investments typically allow investors to earn higher yields, but these types of properties are more complex to manage. Paragon’s report also revealed that HMOs achieve an average yield of 6.5%. The average yield across all property types came to 5.6%.


With more investors looking to purchase HMOs, this shows the property investment sector is further professionalising as they’re not shying away from more complex property investments. To assess HMO property investment deals, use PropertyMenu’s deal calculator to help you decide whether a property investment deal you’re considering is the right investment for you.

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