Landlords with HMOs (houses in multiple occupation) achieve gross annual income that is ‘far beyond’ the levels made by standard rentals, according to new research commissioned by BTL lender Aldermore.

The data reveals that the average non-HMO landlord’s gross rental income over the last 12 months was £61,846. That is around half of what the average HMO landlord made, at £120,283.

Aldermore’s director of mortgages, Jon Cooper (pictured), says: “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.”

“The numbers here are a timely reminder of how attractive HMOs can be as an asset class for many landlords across the country.”

The data also highlights that HMO landlords not only tend to have the highest average rental income, they also tend to have the highest earning portfolios.

Highest gross rental income

30% of HMO landlords have gross rental income of between £100k and £199,999, compared to just 10% non-HMO landlords. And in the highest gross rental income bracket of £200k plus, roughly 13% are HMO landlords, compared to just 5% of other landlords.

And, for students, HMOs represent better value, too, at nearly £200 less per month than those in standard 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Cooper says: “While no housing option is without its trade-offs, our data suggests that HMOs are defying outdated perceptions and offering a more affordable and rewarding experience for many students and presenting a compelling financial opportunity for landlords.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.”