Mish Liyanage: HMOs may be investors’ answer to rising house price inflation

Despite rising house price inflation, there are still opportunities available for investors in the form of houses in multiple occupation (HMOs) aimed at students and young professionals, according to The Mistoria Group.

Mish Liyanage, managing director of The Mistoria Group, explained that it is still possible to acquire high-quality HMOs near universities in the North West for between £125,000 and £350,000.

She said: “For example, in Liverpool, investors can acquire a three-bed fully let property for around £125,000, which will house students and young professionals.

Plenty of demand still needs fulfilling in the UK housing market

“Rents around £90 per week per room, including bills.

“Our Liverpool, Salford and Bolton lettings offices have seen buy-to-let investment in the North west go from strength to strength over the last five years, with investors enjoying cash rental yields of over 8% rental yields and 5% capital growth with-in a mile’s radius from the universities/city are excellent.

“Our research shows that student house share rents start at around £85 per week per room, including bills.

“However, ensuites and large bedrooms can be as high as £125 per week.”

Liyanage pointed to recent Halifax research, which found that property prices reached another record high in May, with the typical home now worth nearly £262,000, £22,000 (9.5%) more than in May 2020.

Prices increased by £3,000 (1.3%) between April and May of this year, although that was slightly lower than the 1.5% growth the previous month.

All regions bar the North East saw an acceleration in year-on-year house price inflation last month.

Liyanage added: “Investors can acquire a high quality three-bed fully let HMO near a university, which will house students from £125,000 upwards.

“The return on investment is very attractive too, with an average of 13% per annum (8% cash rental and 5% capital growth).

“We have seen almost 8% increase in the sale of our armchair HMO deals over the last 12 months compared.”