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Landlords look to buy houseshare properties to boost profits

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24/01/2020
Houses in Multiple Occupation are increasing in popularity among professional landlords looking for a higher yield
Landlords look to buy houseshare properties to boost profits

Demand for Houses in Multiple Occupation (often known as houseshares) is on the rise, as professional landlords look to purchase this type of property, according to Paragon.

The buy-to-let specialist lender found that, of the landlords planning to purchase property in the next 12 months, nearly a third (31%) plan to purchase HMOs.

These larger properties are typically purchased by portfolio landlords (with four or more properties) as they offer a higher yield, but are more complex to manage.

Paragon research shows Houses in Multiple Occupation achieve a yield of 6.5%, compared to an average yield across all property types of 5.6%.

But larger landlords are not just looking for large houseshare properties. A quarter said they plan to buy flats, with 18% targeting terraced housing.

Time to buy?

The research revealed that almost one in 10 (9%) of portfolio landlords (with four or more properties) plan to add to their portfolio over the next quarter, compared to just 1% of non-portfolio landlords.

Richard Rowntree, director of mortgages at Paragon, said: “The private rented sector needs to grow to meet increasing levels of tenant demand and it’s clear that portfolio landlords will drive that growth.

“Not only are they looking to build their portfolios, they are also looking at more complex types of property that will deliver higher yields, such as HMOs.

“Landlords have encountered significant regulatory and fiscal changes in recent years and we hope to now enter a more settled period.”

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