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Guide to the best yields for HMO Investment

Guide to the best yields for HMO Investment

Saturday 18th September 2021

Usually to achieve the best yield for a HMO (House of Multiple Occupation) Investment, landlords typically turn to smaller towns with universities.

Towns and cities with just one university in the area usually fare better than most suggesting that the best returns are not always found in the major cities across the UK.

In a study, Paragon Bank, one of our HMO lenders, have analyzed rental yields across a 2 year period to establish which towns and cities can create a better return on your investment. The top ten towns and cities from their research are as follow.

1. Swansea

Coming in a number 1, Swansea has an average house price of £194,758 and an average rental income of £18,178 giving a typical yield of 9.56%.

2. Hull

There are many bargains to find for 5-6 bed HMO properties in Hull with thousands of students attending the University of Hall every year. Property prices average at £119,538 with a typical yield of 8.60%

3. Plymouth

Although properties are more expensive on average in Plymouth you could still expect a yield of around 8,41% based on today's property prices and anticipated rental income, Property prices here average at £267,287 with an average rental income of £22,471.

4. Liverpool

The home of the Beatles, Cilla Black and two large universities there should be no problem in finding tenants for a HMO property in Liverpool. Average yield is 8.25% with property prices averaging £225,178 and a rental income of £18,569.

5. Coventry

Again there are two universities to be found in Coventry with The University of Warwick and Coventry University. With property prices averaging £290.685 and a rental income of £23,235 you can expect an average yield of 7.91%.

6. Chester

Not far from Liverpool can be found the University of Chester which boasts an average rental income of £21,758 and a yield of 7.88% from an average property price of £281.796.

7. Stoke

The home of Staffordshire University boasts an average rental income of £9,325 from an average property price of £119,773. A yield of 8,21% can be expected.

8. Lincoln

Beautiful Lincoln also makes the top ten due to students from the University of Lincoln requiring accommodation. Typical house prices are around £217,615 with an average rental income of £17,177 and a yield of 7.82%,

9. Preston

The birth place of many famous faces such as Sir Ian McKellen, Nick Park and Andrew Flintoff, Preston offers a yield of 8.01% from a typical house price of £252,850.

10. Leeds

Finally, coming in at number 10, Leeds which houses two Universities gives a yield of 7.62% (average) from a typical house price of £250,009 and a rental income of £19,052.

Please note that this was a study completed in September 2021 so typical house prices, rental incomes and yields can change in the future.