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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Tony Gimple
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It's normal. If you plan to buy a house in one of the most beautiful spots in the country you should pay a high price.

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Evelyn Attwood
Evelyn Attwood 01 Dec 2017

I think that the situation will be the same at December.

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Kelvin Lloyd 09 Oct 2017

IT is up, to the Planners. If they will only give permission for bungalows on certain (suitable) sites, they will be built.

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maggie swift 09 Oct 2017

It's just the beginning of the shocking rise.

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maggie swift
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zoe glover
zoe glover 05 Oct 2017

Update! Worst company I have ever dealt with. Undervalued a Cambridge property by over 100k, wont take on any evidence of valuation including a RICS valuation done 3 years ago for the very same value...

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Paul Edwards
Paul Edwards 27 Sep 2017

Its nonsense articles such as this that make it harder to get clients to realise just how difficult the market is out there. When you see Rightmove and there are more 'price reduced' then 'new' most days...

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Tom Allen
Tom Allen 20 Sep 2017

Absolutely agree with you!

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RyanGeo 18 Sep 2017

A sharp correction would be a less dramatic expression to use. That is already underway in certain sectors in Reading where I practice as Chartered Surveyor

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