Why are HMOs Such a Popular Investment?

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HMO property can be very profitable if dealt with efficiently. This makes them very appealing to first-time and experienced landlords alike.

HMO mortgages (also known as HMO buy-to-let mortgages) are a popular choice for landlords as rental yields tend to be higher than with a standard buy-to-let. HMO Mortgage lenders are also competing to offer the lowest possible rates. This means there’s a better choice of finding a product that meets your needs than ever before.

Read on below to find out more or fill in the form to talk to an expert.

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Understanding HMO Rental Yield

A buy-to-let rental yield tends to be lower than an HMO rental yield. Figures differ because the rent of a simple buy-to-let is charged monthly, based on the property value. An HMO landlord usually charges per room, per week. The gross rental yield of an HMO is typically between 8% and 12% whereas a single let is around 5% and 7%.

Here’s an example: A four-bed house used as a single buy-to-let could achieve a rental of around £700 per month, the same property let as an HMO could bring in £85 per room per week. This would equal a monthly rent of £1,473 per month. Although HMO mortgages can be slightly more expensive, this is countered by the higher rental yield.

As a whole-of-market HMO mortgage broker, ABC Finance Ltd will send you an illustration offering the best HMO finance rates available to you. By doing this, you get to keep as much of the rent received as possible which means more profit.

HMO lenders also offer 85% LTV (Loan to Value) mortgages. This extra borrowing can help you to grow your portfolio.

Things To Consider

As with any financial product, there are pros and cons to HMO mortgages. Read on to weigh these up and decide whether it’s the right decision. You can also find answers to the most frequently asked questions on HMOs here.


  • Strong rental yield when compared with buy-to-let
  • Lower risk of rental voids
  • Rent arrears have less of an impact as the rent is spread across various tenants
  • If the location is right, tenant demand for affordable housing is good


  • Managing the property can be more difficult
  • Start-up costs can be higher if conversion is needed
  • Running costs can be higher
  • Arranging HMO finance can be tougher

Get In Touch

For more information, don’t hesitate to contact us on 01922 620008 or send a query via our online contact form to receive a callback from a member of HMO team.


About The Author

Lee has built a wealth of knowledge and expertise within the commercial finance sector and has sat on the family management team since 2007. His knowledge of the complex residential investment market led to our growth in the HMO and commercial property investment markets. Lee combines his work on HMO and complex investment properties alongside his work in the bridging loan, commercial mortgage and development finance markets.

Lee Hemming CeMAP  -  
Sales Director

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