HMOs can offer greater yields for landlords looking to maximise value from their portfolios. During what is currently a challenging market HMO’s are still looking like an attractive option, especially when it comes to student living. It was feared that the pandemic would affect the total number of students at university and in turn the number that would need housing, but this has not proved to be the case.
The number of students applying for university places has risen to an all-time high during 2020/2021 according to the latest figures from UCAS. For the first time in history, more than four out of ten students have applied for a place at university.
This means more student housing is needed, with a 25% rise in searches during June this year, compared with the same month in 2019, noted by online student property portal AccomodationForStudents.
Adrian Moloney, group director of OneSavings Bank, of which Interbay Commercial is part, said: “Landlords letting HMOs continue to generate significantly higher average rental yields — 6.9% compared to an overall average rental yield of 5.8% — and 18% of landlords who said that they intend to purchase a new property in the next 12 months say they would consider buying an HMO. And as HMOs attract multiple tenancies, gross rental income tends to outstrip single lets, meaning that the rental yield is more secure if one tenant leaves a void.
At InterBay Commercial, we allow large HMOs of up to 20 bedrooms at up to 70% LTV and we process large portfolios under one account number, which means new applications only have to be keyed once.”
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The currently reduction in stamp duty and rise in general tenant demand also make HMOs an appealing choice.
Matt Lenzie from Commerical Mortgages Broker said: “its great to see continued activity in the HMO Finance marketplace despite the continued uncertainty that we face, Interbay and a number of other lenders are supporting landlords with exposure in this sector.”