Research released exclusive to LandlordZONE reveals which properties make the most money and how the pandemic has hit buy-to-let investors’ finances.

Specialist broker Paragon says its research shows that HMOs produce the greatest yields (7%) followed by flats (6.1%) and bungalows (5.9%), showing that the greater the risk, the higher the return.

Its MD for mortgages, Richard Rowntree, says the results are from his company’s survey of over 800 landlords of all types, which asked them to share their experiences of the differences between single property and smaller scale landlords with those managing larger portfolios.

Also, the larger a landlord’s portfolio, the higher the yield – those with portfolios of 20 properties or more produce an average yield of 6.7% while a single property on average produces 4.2%.

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Paragon also asked landlords how Covid has impacted their businesses. Just over a third said they had experienced problems in general following Covid including but not exclusively rent arrears.

Specifically, reduced income has been experienced the most by larger portfolio landlords (see below).

For example, while 36% of one-unit landlords reported significant (17%) or slight (19%) income reductions, 57% of those with 20+ properties reported an income reduction including 24% with ‘significant’ and 33% with ‘slight’.

Away from Covid, the report also reveals that terraced houses are the most popular buy-to-let property across all portfolio sizes, followed by flats, semis and HMOs.

“Although there are various reasons why people operate rental businesses, for many, the primary reason is as a source of income,” says a Paragon spokesperson tells LandlordZONE.

“This means that assessing profitability is one of the most important and obvious ways to gauge how successful a portfolio is.

“Our research shows that larger portfolios enable landlords to invest in a wider range of property types and target those that generate the best yields.”

Pic credit: Nenad Stojkovic | Flickr

1 COMMENT

  1. I am surprised the differences are so small. Presumably the HMOs include professional HMOs where there’s little work between start and end of tenancy.

    To me it’s all about how much actual work you do rather than the building value, from a scale starting at hotels, then AirBnB, then short-term (<12m) contractor lets. After that in the permanent tenancies, it's DSS, then poor people, and last of all well-heeled long-term in expensive houses. The more work there is the more yield you get.

    BTW I assume the flat yield is net of service charge, which can be 20% of rent.

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