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How you can help landlords in Scotland explore new HMO opportunities


Jo, Underwriting Consultant

Published 21.11.2019

It’s no surprise that more and more landlords are exploring Houses in Multiple Occupation (HMO) as a way of boosting their rental yields.

We’ve seen a growing number of borrowers opting for HMOs for new investments in recent years with relevant research finding that 21% of landlords intend to purchase an HMO property in the future1. The latest research shows that many of them are attracted by the superior rental yields they can offer – 6.5% compared with an average overall rental yield of just 5.6%2. They also provide landlords with more commercial security as each tenant is on a separate agreement which means voids are spread and only affect a proportion of the rental income at a time, reducing the risk of payment shortfalls.

It’s why I’m delighted to announce that we’ve now extended our HMO offering to Scotland, opening the door for more investment opportunities for customers.

According to research by lettings agent Howsy3, the average rental yield for buy to let properties is higher in Scotland. Scottish postcodes dominate a list of the best-paying rental locations, with eight out of the top 10 places in the UK being north of the border.

Average rental yield for buy to let properties

Howsy’s findings showed Glasgow was the overall best place to invest in a buy to let property with a current rental yield of 7.5%. Midlothian and East Ayrshire were close behind, both with yields of 6.8%, while West Dunbartonshire came in fourth at 6.7%. Inverclyde offered 6.4%, followed by Falkirk (6.3%), the Western Isles (6.2%) and Clackmannanshire (6.1%). Belfast and Burnley (both offering yields of 6.5%) were the only places outside of Scotland to make the top 10.

As the UK’s leading specialist lender4, we understand HMO landlords’ needs. Our HMO mortgages could be ideal for experienced or portfolio landlords, allowing them to boost their rental income or support future investments.

Our HMO product range is available for personal or limited company ownership and includes two year Fixed rates from 2.79% and five year Fixed rates from 3.19% We’ve increased the portfolio spending limit to £10 million with a maximum of 20 properties with us and unlimited with other lenders.

And our top slicing feature has been extended across our entire Buy to Let range. It means landlords can now use their surplus HMO income for future property purchases to expand their portfolios.

We also offer Refurbishment Buy to Let for works being completed under permitted development rights, provided there are no structural alterations or changes to the footprint of the property. You can read more about permitted development rights in a blog written by our Short-Term Lending Team Manager Barry.

It’s all supported by a knowledgeable Sales Team which is on-hand to answers any questions you might have and an experienced underwriting team which is dedicated to processing your cases as quickly as possible.

To find out more about how we can help click here or call our dedicated support service on 0800 116 4385.

1 BVA BDRC Landlords Panel Report Q2 2019
2 BVA BDRC Landlords Panel Report Q3 2019
3 www.ftadviser.com/mortgages/2019/10/02/top-spots-for-buy-to-let-named
4 BVA BDRC Project Mercury Report Q2 2019


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