Investing in HMO Property – 5 Common Questions & Answers

by | Aug 9, 2021 | BTL, HMO

More and more property investors are adding HMOs to their portfolio and around 500,000 properties in the UK are now HMOs!

The main benefit of HMOs is increased rental yield, but demand for HMOs is also higher, as shared housing is more affordable.

If you’re thinking of investing in HMOs, here are five common questions and answers to help:

How much can you earn with an HMO?

  • The average monthly room rent in the UK is £550 PCM.
  • If your HMO has 4 bedrooms, you could generate around £2200 per month (before costs).
  • The gross yield of an HMO has increased from 8.6% to 9.6% since 2018.

What are the HMO running costs?

As well as monthly mortgage payments, as an HMO Landlord you will need to cover the costs for:

  • Buildings Insurance
  • Council Tax
  • Utilities
  • Internet & TV
  • Maintenance
  • Management 
  • Void periods

What is the best city for HMOs?

(As of August 2021).

  • Outside London, rents are highest in Cambridge at £620 per room, per month. 
  • The cheapest rooms are in Hull at £300 PCM and Aberdeen at £266 PCM.
  • The most affordable cities for Terraced houses are Sheffield (£153,000), Nottingham (£143,000), Liverpool (£122,000), and Hull (£109,000). 
  • When comparing house prices vs room rent, Glasgow, Liverpool, and Leeds provide some of the best returns for HMOs.

What type of property can be an HMO?

Not all properties are suitable for conversion into an HMO. You may also need planning permission for your HMO. 

This type of rental model favours older, large Victorian properties with bigger rooms and several floors as they can offer greater returns.

How do you finance an HMO?

A bridging loan can be used to purchase or refurbish an HMO property, however, you will need an HMO Mortgage in order to let the rooms to tenants.

HMO Mortgages are harder to secure and generally more expensive than typical buy-to-let loans. However, the higher rental yield means they can provide a great return on investment.

At Ramsay and White, we can help you secure the best finance solution to start your HMO investing business.

We will also show you how to enter and exit the deal with the right finance product, that offers you speed and momentum to continue on your property journey.

Get in touch below to speak to the team and find out more!


*Your property may be repossessed if you do not keep up with the payments on your mortgage or any other finance secured against it.