"While no housing option is without its trade-offs, our data suggests that HMOs are defying outdated perceptions and offering a more affordable and rewarding experience for many students and presenting a compelling financial opportunity for landlords"
- Jon Cooper - Aldermore
Landlords operating houses in multiple occupation (HMOs) are earning significantly higher gross rental income than those with non-HMO properties, according to research commissioned by Aldermore.
The study, conducted by Pegasus Insight, found that the average non-HMO landlord made £61,846 in gross rental income over the past year. In contrast, the average HMO landlord earned £120,283, almost double the amount.
“Whilst it’s common knowledge that HMO landlords tend to benefit from enhanced annual incomes and greater yields, the difference in scale here is major,” said Jon Cooper, director of mortgages at Aldermore. “The numbers here are a timely reminder of how attractive HMOs can be as an asset class for many landlords across the country.”
Higher representation in top income brackets
The findings also show that HMO landlords are disproportionately represented in the higher-earning categories. Thirty per cent of HMO landlords reported gross rental incomes between £100,000 and £199,999, compared with 10% of landlords without HMOs. At the top end, 13% of HMO landlords earned more than £200,000, compared with just 5% of non-HMO landlords.
Benefits for tenants
Separate research by Opinium on behalf of Aldermore highlighted that HMOs also offer benefits to tenants, particularly university students. On average, students in HMOs reported a monthly rent of £600, nearly £200 less than the £791 average for other private rentals.
Three-quarters (74%) of HMO tenants said the arrangement improved their social lives by helping them interact more regularly with others.
“While no housing option is without its trade-offs, our data suggests that HMOs are defying outdated perceptions and offering a more affordable and rewarding experience for many students and presenting a compelling financial opportunity for landlords,” Cooper continued. “With the right management and attention to quality, landlords can enjoy reliable returns while offering affordable, socially enriching homes that truly make a difference to student life.”
