Many landlords are turning their properties into HMOs in a bid to boost rental income as tax rises loom.
Lender specialist Roma Finance says it has dealt with more HMO conversion cases in 2016 than ever before.
The buy-to-let market has had to weather a wave of measures in recent years, including an extra 3% stamp duty surcharge on second homes and changes to buy-to-let tax relief on mortgage interest payments. The latter, due to be phased in from April 2017, may affect profits for landlords.
Landlords who are keen to hold onto their buy-to-let properties are increasingly choosing HMO conversions as an option to ensure they don’t lose out when tax rises bite.
HMOs, Houses in Multiple Occupation, are defined as properties where there are three or more tenants. These tenants will be renting separately, but share communal facilities.
By converting a property into an HMO, a landlord can usually expect to increase rental income and yields.
The buy-to-let market has cooled slightly in recent months, with fewer investors buying property. However, this is good news for first-time buyers, who now have more property options when entering the market.
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