Owners of London HMOs rarely put them up for sale, meaning investors will more than likely need to convert a residential home into an HMO to get into the market, reveals specialist lender Octane Capital.
Research conducted by Octane revealed that London has by far the most HMOs in England, reflecting the fierce nature of the rental market in the capital.
Across London, there are some 83,900 HMOs, accounting for 38.7% of England’s total.
However, just 0.2% of these are currently listed on the market.
Landlords are eager to hold onto these properties because homes split into different units are ideal for investors looking for a stronger return.
Previous research by Octane discovered that HMOs housing four tenants typically net investors a monthly rent of £593 per room, or £2,372 monthly.
This brings the average yield to 8.1%, almost doubling the 4.4% achieved on a regular four-bed property.
The issue of finding a home that already operates as an HMO is felt by investors across the regions, as only 1.6% of the nation’s 217,000 HMOs are currently listed for sale.
Octane has suggested that investors’ best chances of finding an HMO are in the South East, where there are 654 listings, more than any other region — accounting for 19.4% of all current HMOs listed for sale.
The North West also ranks high, with some 507 HMOs currently on the market — accounting for 15.1% of national stock for sale — with the East Midlands ranking third with 448.
Jonathan Samuels, CEO at Octane (pictured above), commented: “London is by far the toughest region when it comes to finding a ready-made HMO for sale.
“Yes, it may have a hefty supply of stock, but owners of HMOs are seemingly in it for the long haul in the capital and are showing a lack of appetite to sell.
“As a result, you’re better off buying a residential or commercial property and converting it into an HMO in London, despite the challenge of gaining permissions.”
