Buy to let investors in London increasingly attracted to HMOs

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Many landlords in London are finding that their investments are not as profitable as they used to be. To increase profits many are looking at Houses of Multiple Occupancy (HMO).

Property prices in London are high, tax benefits on buy to let mortgages have been cut. This has meant that investing in buy to let property in London is less profitable than a few years ago.

Some landlords are looking at other areas of Britain where rental yields are higher, particularly in University towns where the student population is expanding.

Landlords are finding that the rental yields from HMOs in London can be between 7% and 9%, 2% above that of single occupancy houses.

Bridging loans are available to purchase and convert family houses to HMOs, then a specialist HMO buy to let commercial mortgage can be arranged for long term finance.

Although rental yields on HMO property can be higher, there is more work involved. Landlords will need to deal with several tenants instead of one. Many tenants in HMO houses will be students or young professionals that do not stay for lengthy periods. This means that vacancy times tend to be longer and the landlord needs to work harder to frequently attract new tenants.

David Lawrenson of said:

“Before jumping straight in it is essential that prospective HMO landlords do their research, carefully comparing the additional work and expense against the additional profit they’d be likely to make.”

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