Landlords who operate HMOs receive rents that are almost twice as much as those who operate ‘family homes’, new research shows.
The poll by lender Aldermore reveals that non-HMO landlords reported a pre-tax income of £61,846 over the past 12 months while those operating HMOs reported £120,283.
Such a disparity in income levels may explain in part why so many towns and cities around the UK have seen family homes being bought and converted into HMOs by investors – income and yields from this kind of property are much higher, although the work required to manage them is often much more demanding too.
Aldermore’s director of mortgages, Jon Cooper (pictured), says: “Whilst it’s common knowledge that HMO landlords tend to benefit from enhanced annual incomes and greater yields, the difference in scale here is major.
"The numbers here are a timely reminder of how attractive HMOs can be as an asset class for many landlords across the country.”
The poll also found that HMO landlords are over represented among high-earning landlords with 30% reporting a gross income between £100,000 and £200,000 compared to just 10% of non-HMO landlords.
For the highest gross rental income category of £200k plus, roughly one in eight (13%) HMO landlords fell into this bucket, compared to just one in twenty (5%) landlords without HMOs.
Aldermore also polled student HMO tenants around the UK and discovered that they pay nearly £200 a month less than those living non-HMO properties (£791 vs £600) and that three quarters reported enjoying life within their HMO because it was more ‘social’.
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