HMOs have made up more than a third (34%) of all of Shawbrook’s BTL business registered in Q1 2024, the lender’s latest internal data has revealed.
This is an increase from the business levels registered in 2023, when HMOs made up just over a quarter (27%) of all of the bank’s BTL business that year.
The firm has also noticed a rise in HMO business from non-portfolio landlords, from 17% to 21%.
“As landlords have dealt with years of challenges stemming from the pandemic and culminating in the past couple of years of economic uncertainty, HMOs have proven to be a sound strategy for landlords looking to diversify their portfolios, as well as strong option for non-portfolio landlords entering the market,” said Daryl Norkett, director of real estate proposition at Shawbrook.
“HMO rental yields are more easily able to afford mortgage lending in a higher interest rate environment, and the regular turnover of tenants allows landlords to stay on track with market rents.
“The option to reconfigure properties and the ability to turn lower yielding single lets into higher yielding HMOs has clearly been a strong draw over the past year or so, as landlords adjust their businesses to succeed in a tougher economic environment.”
Looking ahead, Daryl predicted there could be further significant growth in the HMO sector, should there be any interest rate cuts in the near future.
