“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 (pictured), 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.”

He also pointed out that the conversion of single lets into more profitable HMOs has become an attractive strategy for landlords navigating a challenging economic landscape.

“We have already improved our HMO criteria to enable landlords to secure larger maximum loan sizes,” Norkett said. “And while we have already seen a modest increase in HMO activity, once the predicted interest rate cuts finally arrive, we’d expect to see significant growth in this sector.”

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