Landlords ditching buy-to-let for HMOs

Landlords ditching buy-to-let for HMOs

Roma Finance is seeing a record number of buy-to-let landlords converting their properties into Houses in Multiple Occupation in order to increase rental income as tax increases start to bite.

Roma Finance funded more conversion cases of this type in 2016 than any previous year. The main reasons for the demand for bridging finance to convert buy to lets to HMOs are the potential increase in yield and the greater opportunity to rent more rooms in cities and towns with high populations of young professionals and students.


However Roma says that although HMOs are well known to offer the potential of higher rental yields, tenant turnover can be higher and be more labour-intensive than single buy-to-lets.

Scott Marshall, managing director at Roma Finance, commented: “Recent Government policy has put the spotlight on the buy to let market and landlords have acted quickly to mitigate any negative effects on their income. Many want to retain property but maximise income and we have worked with many landlords to fund conversions to HMOs. One landlord we worked with calculated that in one of their properties they could rent out five rooms, vastly increasing income and yield, for just a £30,000 conversion cost. The increased rental income would cover the cost of the loan over twelve months. In this case it made a lot of sense to carry out the conversion.

“Converting a single occupancy buy to let to HMO is one option for landlords and we have a number of cases already in the pipeline which will be funded in the coming weeks.”

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Comments

  1. Tony GimpleTony Gimple16 January 2017 12:34:28

    HMOs do make great commercial sense, but do the area research first!

    Reply to this comment

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Latest Comments

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How is the "robust evidence" looking now?

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Thanks for this article. Hopefully one day everybody's lifestyle will be eco-sustainable.

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I was convinced that London was the most expensive!

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James Powell
James Powell 27 Feb 2017

This is a very good news.

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DanHumphreys
DanHumphreys 27 Feb 2017

It sounds like a good idea. Anything to help the younger generation get a foothold.

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Matt
Matt 20 Feb 2017

Is this fake news?

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