Landlords with HMOs (houses in multiple occupation) are seeing gross annual income levels far beyond what non-HMO landlords are enjoying.
The average non-HMO landlord made £61,846 in gross rental income during the previous 12 months. This is just over half of what the average HMO landlord made, at £120,283.
The research was provided to mortgage lender Aldermore by Pegasus Insight has found.
Jon Cooper, Aldermore’s director of mortgages, said: “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.
“The numbers here are a timely reminder of how attractive HMOs can be as an asset class for many landlords across the country.”
HMO landlords are significantly over-represented not just for average rental income, but also amongst those landlords with the highest-earning portfolios overall.
Three in 10 (30%) HMO landlords fell into the gross rental income bracket between £100k and £199,999, compared to just one in 10 (10%) landlords without HMOs.
For the highest gross rental income category of £200k plus, roughly one in eight (13%) HMO landlords fell into this bucket, compared to just one in twenty (5%) landlords without HMOs.
Polling from Opinium on behalf of Aldermore2 shows that students living in HMOs pay nearly £200 less per month than those in other private rentals (£600 vs £791). Three quarters of HMO tenants (74%) also say their living situation has benefitted them socially by helping them interact with others more regularly.
Cooper added: “While no housing option is without its trade-offs, our data suggests that HMOs are defying outdated perceptions and offering a more affordable and rewarding experience for many students and presenting a compelling financial opportunity for landlords.
“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.”