New data from Paragon, a buy-to-let specialist lender, reveals the regions in Britain where Houses in Multiple Occupation (HMOs) are generating the highest yields.
At the top of the table is Wales, where HMOs produce an impressive average yield of 9.01%. Landlords in the Yorkshire & Humber region follow closely behind, with a yield of 8.61%, while the North West comes in third at 8.33%. Five regions across Britain see yields of over 8.0%.
Here's a snapshot of the top regions and their respective yield percentages:
|
Region |
Value |
Rental income |
Yield % |
|
Wales |
£322,000 |
£29,100 |
9.01 |
|
Yorkshire & Humber |
£308,000 |
£26,600 |
8.61 |
|
North West |
£324,000 |
£27,000 |
8.33 |
|
East Anglia |
£344,000 |
£28,400 |
8.26 |
|
East Midlands |
£325,000 |
£26,400 |
8.12 |
|
Scotland |
£309,000 |
£24,400 |
7.91 |
|
West Midlands |
£355,000 |
£27,100 |
7.63 |
|
North |
£381,000 |
£28,000 |
7.58 |
|
South West |
£478,000 |
£35,800 |
7.48 |
|
South East |
£503,000 |
£36,100 |
7.18 |
|
London |
£863,000 |
£52,900 |
6.13 |
In contrast, London ranks at the bottom of the HMO yield table, generating a yield of 6.13% from rental income of £52,900 and an average property value of £863,000.
HMOs generally offer higher yields than other property types due to being let on a per-room basis, but they also come with increased maintenance costs.
Property qualifies as an HMO if at least three tenants live there, forming more than one household and sharing certain facilities. Larger HMOs are those with five or more residents sharing facilities.
The demand for HMOs has grown in recent years, driven by rising accommodation quality, with en-suites becoming commonplace. However, managing HMOs requires expertise, understanding the target tenant market, and locating properties in strategic areas.
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