New research from Excellion Capital reveals that converting standard residential properties into Houses in Multiple Occupation (HMOs) could deliver gross rental yields as high as 12.5% in parts of England—more than double the typical yield of 5-6% from standard rental homes.

The Investment Case

• Average purchase price of a 3–4 bed house in England: £444,273

• Average HMO conversion cost: £11,345 per room or £68,067 for a 6-bed

• Total investment (purchase + conversion): £512,340

• Average monthly rent per room: £711

• Total monthly income (6-bed HMO): £4,269

• Average gross yield: 10% across England

Highest-Yielding Areas

• North East: 12.5%

• North West: 11.5%

• Yorkshire & Humber: 11%

• Manchester: 12.2%

• Newcastle: 11.9%

• Birmingham: 10.6%

Lowest-Yielding Areas

• London: 6.6%

• South East: 8.1%

Financing Insights

• HMO projects typically qualify for bridge loans, which:

  • Offer quick turnaround and higher leverage (up to 75% of purchase and 100% of works)

  • Can be refinanced onto investment finance post-conversion (rates below 6% fixed)

  • Work best with lenders who base borrowing on income-producing value rather than vacant value

Things to Consider

• Conversion costs vary based on property condition; light refurbishments and compliance work will cost less than extensive renovations.

• Lenders generally favour HMOs due to their strong rental yields and steady demand—especially in university towns and cities with high rental need.

• Investors targeting portfolios of HMOs with total borrowing over £1 million may benefit from preferential rates.

Expert View

An Excellion Capital spokesperson explains:

“We’re seeing increased investor interest in the HMO market, particularly in regions where purchase prices remain reasonable. Combined with strong rental demand, HMOs are generating exceptional returns—and lenders are backing them.”