Your Business and Industry
Opportunities in the HMO market
Lenders are increasingly adapting their offerings to align with the evolving composition of landlord portfolios. A key driver behind this shift is the sustained growth of the HMO sector, where professional landlords are capitalising on higher rental yields.
This continued demand underlines the appeal of HMOs as a profitable investment, further solidifying their role as a valuable asset within a growing number of portfolios.
This trend is evident in the latest Pegasus Insight Landlord Trends for Q4 2024, which suggests that HMOs continue to generate some of the highest rental yields on offer, with landlords achieving an average yield of 7.0% for this property type. Similarly, those who own a whole block of individual flats (7.1%) and landlords with 11+ properties (7.1%) also see strong profitability.
When it comes to potential rental increases going forward, HMOs - once again - stand out, with landlords expecting the largest rental increases, averaging 7.0%. Notably, 39% of HMO landlords report that their rent increases are intended to reflect upgrades already made to their properties.
For those landlords who were looking to purchase buy to let properties in the coming months, it was interesting to see the comment 'to expand my portfolio with profitable HMOs' featuring highly on the list of reasons, and this is certainly reflected in our ongoing conversations and enquiries received over the first few weeks of 2025.
This points to a strong and sustained demand for HMO lending across the UK. However, the added complexity of HMO financing makes it essential for landlords to seek guidance from specialist advisers and for advisers to partner with lenders who can assess cases individually and navigate potential challenges with tailored solutions.
So, if you want to support more of your business and let clients explore a broader range of HMO opportunities, why not connect with the Foundation team? We're here to help you understand our offering and provide the right solutions to meet all your clients' buy to let needs.
For intermediaries only
