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The North East leads the way in profitable HMO investment, according to the latest data from lender Lendlord.
The North East is among the cheapest regions in which to buy a shared home to rent privately, and the location has the highest yield by far.
Data for the last quarter of 2024 reveal that the average shared house costs £201,758 in the North Weast and generates an annual rent of £31,032, giving a gross yield of 15.4 per cent.
This compares with a national average of a £316,893 property value, producing £30,772 rent in a year at a gross yield of 14.4 per cent.
The poorest yield is 6.08 per cent in London, where the average HMO property costs £660,227, and the rent is £40,169 a year.
The cheapest HMO properties are worth £196,014 in Yorkshire and The Humber, while the highest rent is in the South East, where tenants pay an average of £46,041 a year.
London has the most significant number of shared houses to rent, with 20 per cent of the market, followed by the North West (15.1 per cent), the West Midlands (11.8 per cent), and Yorkshire and The Humber (11.4 per cent). No other region had a double-digit share.
The regions with the fewest HMOs are the North East (3.5 per cent) and Wales (4.3 per cent).
Lendlord CEO Aviram Shahar explained HMO shared houses are essential to the private rental sector.
“Maximising its potential requires clear, data-driven insights. This report highlights key trends and regional disparities, providing landlords and brokers with the information they need to make informed, strategic decisions,” he said.
The figures cover Q4 2024 based on Lendlord’s dataset of 1,126 HMO properties across the UK.
| Region | HMO Value | Yearly Income | Yield |
|---|---|---|---|
| North East | £201,758 | £31,032 | 15.40% |
| Wales | £204,000 | £23,252 | 11.40% |
| East of England | £297,662 | £33,354 | 11.21% |
| Yorkshire & Humber | £196,014 | £21,208 | 10.82% |
| South East | £436,146 | £46,041 | 10.56% |
| North West | £260,305 | £27,274 | 10.48% |
You can calculate your yield by dividing the yearly rent by the property's value.
For example, an HMO worth £295,000 generating £25,000 has a yield of 8.47 per cent, which works like this:
(£25000/£295,000) = 0.0847
Now, multiply 0.0847 by 100 to read the result as a percentage
0.0847 x 100 = 8.47 per cent