Despite market averages dipping slightly in the first quarter of the year, landlords was has houses in multiple occupation (HMO) and multi-unit freehold blocks (MUFB) in their portfolios are achieving the highest rental yields.

The Precise Mortgages’s research has found average rental yields for HMO are the highest across all types of property at 7.1%, 1.3% above the market average.

Multi-unit freehold blocks yields are the second highest at 6%, showing the opportunities for landlords to refocus portfolios, the study by BDRC Continental found.

Managing director of Precise Mortgages, Alan Cleary, said: “As HMOs attract multiple tenancies, gross rental income tends to outstrip single lets and rental income is more secure even if one tenant leaves a void.

“Experienced landlords are looking to rebalance their portfolios and there is a real opportunity for brokers to support them to work with specialist lenders who are prepared to be flexible and have expertise across the widest product set.”

Across all property types average yields dipped slightly in Q1 2018 to 5.8% from 5.9% in the last quarter of 2017 and now are at the same level as Q1 2017.

Portfolios of between 11 and 19 properties, underlining the continued rise of the professional landlord, got the highest average yields of 6.7%. By contrast those with just one property achieved yields of 4.8%.

Central London portfolios produced the lowest average yields at 4.8%.

And on a regional basis, landlords with portfolios in the North West reported the highest rental yields at 6.7%. 

Precise Mortgages’ HMO product range includes 2-year tracker rates from 2.75% and 2-year fixed rates from 3.09% as well as lifetime trackers from 3.50% and 5-year fixed rates assessed on pay rate from 3.69%.

The portfolio lending limit has been increased to £10m with a maximum of 20 properties with Precise Mortgages and unlimited with other lenders.