At the 2018 Financial Service Exhibition in Manchester, a panel of experts discussed the best property investment opportunities and concluded that houses of multiple occupation (HMO) for students were one of the best property types to invest in.

HMO properties for students are typically large houses that have been converted with several bedrooms and communal areas such as bathroom, lounge and kitchen. The reason that these are recommended for investors is that rental returns are generally higher than homes rented to one tenant.

Buy-to-let landlords faced with increased costs are looking to diversify their property portfolio in order to increase profits, and HMOs are one way to do this.

The panel recognised that HMO investments can be complicated. Many houses suitable for conversion to an HMO are old and may need upgrading to conform to new energy efficiency standards. Many commercial mortgage lenders will either refuse a loan for a low-energy efficient building or make it a condition of the mortgage offer that energy efficiency upgrades are completed within a set period, usually a few months.

Dealing with a number of tenants rather than a single one creates more administration work. The HMO may need to be licenced by the local council, which will check that the property is both suitable and safe for tenants.

Investors wanting to buy property suitable for HMO use can use a mortgage broker to find the best commercial mortgage deals to purchase and convert property.