HMOs, or Houses in Multiple Occupation, consistently outperform traditional buy-to-let properties in terms of rental yield and offer unique advantages that contribute to a more resilient and profitable property portfolio.

Higher Rental Yields

One of the most compelling reasons to invest in HMOs is their ability to generate significantly higher rental income. By renting out individual rooms rather than an entire property on a single tenancy, you create multiple income streams from a single asset. This “rent-per-room” model often results in gross rental yields that can be two to three times higher than those from comparable single-let properties. This enhanced cash flow is a key factor in achieving those desirable double-digit ROIs.

Diversified Income & Reduced Void Periods

With multiple tenants contributing to the rental income, HMOs inherently offer a diversified revenue stream. This significantly reduces the risk of total income loss. If one tenant moves out, the income from the remaining tenants helps cover expenses, ensuring a more stable cash flow compared to a single-let property that would sit entirely vacant during a void period. This built-in resilience makes HMOs a more secure investment, particularly during economic fluctuations.

Strong and Consistent Demand

The demand for shared accommodation in the UK continues to rise. Factors such as increasing housing costs, the growing number of young professionals, key workers, and students, all contribute to a sustained appetite for affordable, flexible, and well-located shared living options. HMOs fill a critical gap in the market, making it easier to find and retain tenants, thereby reducing vacancy rates and maximising your occupancy.

Resilience in Economic Shifts

HMOs tend to perform robustly even during economic downturns. When affordability becomes a primary concern for renters, shared housing becomes an even more appealing and cost-effective solution. This counter-cyclical nature positions HMOs as a robust and reliable investment that can hold its value and continue to generate income in various market conditions.