- Houses in Multiple Occupation in Wales generates yield of 9.01%
- Yorkshire & Humber HMOs second on the list, with the North West third
- London HMOs generate the lowest yields in Britain
Welsh Houses in Multiple Occupation (HMO) are generating the highest yields across Britain, Paragon Bank data has revealed.
The data from buy-to-let specialist Paragon, based on applications, shows that Welsh HMOs produce an average yield of 9.01%, generated from an average £29,100 rental income and an average £322,000 valuation.
Yorkshire & Humber is second on the list with landlords in the region generating a yield of 8.61% on HMOs, with the North West third at 8.33%. HMOs in five British regions generate a yield of more than 8%.
| Region |
Value |
Rental income |
Yield |
| Wales |
£322,00 |
£29,100 |
9.01 |
| Yorkshire & Humber |
£308,000 |
£26,600 |
8.61 |
| North West |
£324,000 |
£27,000 |
8.33 |
| East Anglia |
£344,000 |
£28,400 |
8.26 |
| East Midlands |
£325,000 |
£26,400 |
8.12 |
| Scotland |
£309,000 |
£24,400 |
7.91 |
| West Midlands |
£355,000 |
£27,100 |
7.63 |
| North |
£381,000 |
£28,000 |
7.58 |
| South West |
£478,000 |
£35,800 |
7.48 |
| South East |
£503,000 |
£36,100 |
7.18 |
| London |
£863,000 |
£52,900 |
6.13 |
London is bottom of the regional HMO yield table, generating 6.13% from rental income of £52,900 and an average property value of £863,000.
Yields on HMOs are generally higher than other property types as they are let on a per-room basis, but they are typically more expensive to run due to increased maintenance costs. A property is classed as an HMO if at least three tenants live in the property, forming more than one household, and sharing a toilet, bathroom or kitchen facility. A large HMO is where there are five or more residents living in the property with shared facilities.
Paragon Bank Commercial Director for Mortgages Louisa Sedgwick said: “Demand for HMOs has grown in recent years as the quality of the accommodation has risen, with facilities such as ensuites becoming commonplace. HMOs are moving up the quality scale as tenants demand more space, better services and access to private facilities.
“Although yields measured as the ratio of rental income to property price are strong for the market, the actual landlord return, which is rental income versus mortgage payments, is even stronger for this property type, but they are typically more labour intensive than a standard buy-to-let property.”
She added: “The key to a successful HMO proposition lies in the experience of the landlord, the location and understanding the target tenant market. We are specialists in lending to HMO landlords, especially on large HMOs of up to 20 sharers, so can offer a unique insight into how this segment of the market is performing.”
For media enquiries contact:
Michael Clarke
Head of Media Relations
Paragon Bank
Tel: 07740090746
www.paragonbank.co.uk
Notes to editors:
Paragon lends to private individuals and limited companies and provides mortgages suitable for single, self-contained properties, as well as HMOs and multi-unit blocks. Paragon can accommodate higher aggregate lending limits and more complex letting arrangements including local authority leases and corporate leases along with standard ASTs.
Paragon Bank PLC a subsidiary of the Paragon Banking Group PLC which is a FTSE 250 company based in Solihull in the West Midlands. Established in 1985, Paragon Banking Group PLC has over £14 billion of assets under management, helping more than 340,000 customers to achieve their ambitions.