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UK Landlords are investing in more complicated lets
Average yields on non-standard properties have continued to rise above buy-to-let investments, according to the latest Mortgages For Business research.
Multi-unit freehold blocks (MUFBs) have overtaken houses in multiple occupation (HMOs) and now provide landlords with the highest gross yield.
This was at 9.3% for the final three months in 2014, which is the highest yield on record for this property type.
HMOs have also seen rental yields rise, to 9% within the same period, from 8.9% in the third quarter of last year.
The only exception to this trend is semi-commercial property, which saw yields fall to 6.4% from a high of 9.7% in the third quarter.
Gross yields on the most straightforward buy-to-let schemes have returned towards the levels seen in early 2014.
For a standard rental property the equivalent figure is now 6.3%, up from 5.9% in the third quarter.
Mortgages For Business managing director David Whittaker said: "Rental yields for HMOs and MUFBs are typically higher than those for basic buy-to-let.
"For a multitude of reasons, not least stagnant wage growth for half a decade, many tenants simply can't afford an enormous flat with a spare bedroom.
"As such, the attraction for many of renting a room rather than a whole property will ensure there is a steady yield-boosting demand for HMOs over 2015."
"While property prices have slowed a little in recent months, landlords have, on the whole, seen enormous price growth compared to the indecisive direction of property prices a few years ago.
"Looking ahead, this might spur some landlords to expand their existing portfolios further and diversify as a result of the high yields on non-standard properties."