The survey of 738 members of the National Landlords Association showed that 21 per cent of landlords who plan to buy property in the coming year want HMOs.
Some 50 per cent of landlords who plan to purchase would buy a terraced house, the property type featured high on the list for a sale. Among landlords who aim to sell, 40 per cent would offload terraced houses.
The research pegged average rental yields at their lowest level since 2010 for all property types. Average yields dropped to 5.5 per cent in Q2, down from 5.8 per cent in Q1.
HMOs achieved the highest average yields at 6.3 per cent.
Of the landlords who own HMOs, only 8 per cent plan to sell. Landlords were looking favourably on blocks of flats too, with 8 per cent aiming to buy compared to the 5 per cent who want to sell.
Landlords whose portfolios count between 11 and 19 properties reported the highest average yields at 5.9 per cent. Regionally, the North West generated the highest average yields, also at 5.9 per cent.
“HMOs are an attractive option for professional landlords looking to maximise yields at a time of market uncertainty,” said Alan Cleary, managing director of Precise Mortgages (pictured).
“HMOs attract multiple tenancies, therefore gross rental income tends to outstrip single lets and income is more secure if one tenant leaves a void.”
“The expansion of the HMO sector underlines how experienced landlords are rebalancing their portfolios. There is an opportunity for brokers to work with lenders that have expertise across a wide product set and to support clients who are reassessing their portfolios,” he said.
“We also offer Refurbishment Buy to Let for works being completed under permitted development rights, provided there are no structural alternations or change to the footprint of the property. This is a really exciting development enabling landlords to change the use of a property from a C3 dwelling house to a C4 HMO of up to six bedrooms,” Cleary added.
Agency BDRC surveyed 738 members of the National Landlords Association online during June, on behalf of Precise Mortgages.