Expanding Your Client’s Property Portfolios with HMOs & Student Lets

Spreading risk across rental markets can make portfolios more resilient. HMOs and student accommodation not only add that diversity but are capable of creating opportunities for clients aiming for stronger yields and consistent income.

HMO investment opportunities

HMOs currently deliver average yields of around 10%, which are significantly higher than standard buy-to-lets at 6%. In Manchester, returns may reach 12.2%, while Birmingham averages 10.6%, with parts of Yorkshire and the North West regularly exceeding double digits.

The model also offers natural income diversification. When one room falls vacant, rent from other tenants helps to steady cashflow and provide resilience during more volatile market conditions. At Molo, we finance HMOs with up to 12 rooms, with rates starting from 2.89%.

The student accommodation advantage

According to the most recent data, there were approximately 2.90 million students enrolled at UK higher education institutions in 2023/24.

Yet the supply of purpose-built student accommodation (PBSA) still falls well short. There is a current student‑to‑bed ratio of 2.1:1, highlighting a persistent shortfall in available beds. In other words, for every bed available in PBSA, there are more than two students seeking it.

The ongoing imbalance continues to underpin solid fundamentals for private landlords. Compared to traditional lets, student lets often generate income across 51 weeks annually, potentially offering a more consistent cash flow.

Tenancy patterns also provide unusual predictability. Students tend to secure accommodation months in advance, giving landlords clear visibility on renewals and departures.

Regulatory considerations

Both student lets and HMOs require attention to licensing. Properties with five or more unrelated tenants usually need an HMO licence, and some councils extend this requirement to smaller homes.

Molo asks landlords to have at least 12 months’ buy-to-let experience before applying for an HMO mortgage to reflect the higher management and regulatory demands of the sector.

The numbers highlight why HMOs and student accommodation continue to outperform standard buy-to-lets. For clients looking to diversify, they offer stronger returns and steadier income.

Position your clients for higher yields with HMOs and student lets. Connect with your Molo BDM to discuss further.