The best region for HMO rental yields revealed
HMO landlords in the North East of England are enjoying the highest average yield at 15.4%, research reveals.
According to Lendlord's HMO Data Analysis, this contrasts sharply with Greater London.
Landlords there may boast having the biggest average property value of £660,227 but they have lower yields.
The report, which analysed 1,126 HMO properties, shows an inverse relationship between property values and yields.
The property management platform says this presents opportunities for investors in regions with lower purchase prices.
'Significant opportunities for landlords'
The firm's co-founder and chief executive, Aviram Shahar, said: "The HMO market remains a cornerstone of the UK's rental sector, offering significant opportunities for landlords and investors.
"However, maximising its potential requires clear, data-driven insights."
He added: "This report highlights key trends and regional disparities, providing landlords and brokers with the information they need to make informed, strategic decisions."
Average HMO yield
The research also shows that the South East leads in annual rent income of £46,041, while the UK’s average HMO yield sits at 10.4%.
However, Lendlord says its date makes investing in the South East 'a compelling option' for investors wanting a balance between rental returns and capital value.
The report also reveals that price-to-rent regional ratios vary from 2.7 years in the North East to Greater London’s 6.5 years.
They average 4.2 years nationally.
Greater London accounts for 20.6% of the analysed HMOs, while the West Midlands (11.8%) and North West (15.1%) also hold substantial market share.
Buy to let investors
The research from Lendlord is also reflected in the latest Quarterly Rental Barometer from Fleet Mortgages.
It found that the northern regions of England and Wales are proving particularly attractive for buy to let investors.
The data shows much higher average rental yields in the North East (9.3%), Yorkshire and Humberside (8.6%), and the North West (8.3%).
This contrasts with southern areas, where higher property prices, mortgage loan amounts, and monthly rents contribute to lower yields.
Greater London, for example, offers an average yield of 5.8%, while East Anglia and the South East achieve 6.3% and 6.4% respectively. Fleets' report, which covers all regions where they lend, provides a detailed regional breakdown of rental yield performance across England and Wales, with the national average standing at 7.4%.
'Significantly higher rental yields'
The managing director of Accommodation for Students, Simon Thompson, said: "Lendlord's HMO report paints a picture of diverse opportunities across the country.
"While London's high property values might seem attractive, the North East offers significantly higher rental yields, presenting an alternative for landlords who prioritise return on investment.
"Understanding these regional variations is crucial for student landlords seeking to maximise their portfolios."
He added that the report's findings suggest that careful analysis of regional trends, including price-to-rent ratios and average rental incomes, is essential for successful investment in the student rental market.
