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High yield HMO conversions in the North

January 20, 2017 | Landlord News  

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The specialist bridging finance lender, Roma Finance, reports a record number of conversions from buy-to-let properties into HMOs in 2016. It is believed that the main reasons behind the high conversion rates is the potential rise in rental yield plus the greater opportunity to rent more rooms in cities and towns with high populations of young professionals and students. In 2016, Leeds was named as the city with the highest rental yield with yields of up to 12% being taken, meaning that it outperformed other UK cities.

HMOs have the key characteristic of high income as well as reliability which makes them highly attractive to Landlords. In Leeds, the HMO market is booming due to the large student population as well as the huge amount of young professional renters living and working in the city. These properties provide excellent rental yields for Landlords making them a highly popular investment.

The Managing Director of Roma Finance, Scott Marshall, commented: “Recent government policy has put the spotlight on the buy-to-let market and Landlords have acted quickly to mitigate any negative effects on their income. Many want to retain property but maximise income and we have worked with many Landlords to fund conversions to HMOs.”

“One Landlord we worked with calculated that in one of their properties they could rent out five rooms, vastly increasing income and yield, for just a £30,000 conversion cost. The increased rental income would cover the cost of the loan over twelve months. In this case it made a lot of sense to carry out the conversion.

“Converting a single occupancy buy-to-let to HMO is one option for Landlords and we have a number of cases already in the pipeline which will be funded in the coming weeks.”

Last year northern regions had extremely high returns on HMOs. In the North East, HMO returns were 133.1% – more than three times the average buy-to-let property. It is expected that high yields on HMOs, especially in Northern regions such as Leeds, will continue in 2017 making it time to consider HMOs.  

Let Leeds has a range of HMOs available. Call our Sales Team on 0113 320 2000 to find out more.


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