HMO properties produced the highest yields in the first quarter of 2018, at 7.1% - 1.3% above the market average, according to fresh research from Precise Mortgages.
Yields on multi-units, such as blocks of flats, came a close second in Q1 2018, generating an average yield of 6%.
Across all property types average yields fell marginally in Q1 2018 to 5.8% from 5.9% in the last quarter of 2017 and are now at the same level as Q1 2017.
Professional landlords continue to achieve the highest yields, reflected by the fact that those who currently own a portfolio of between 11 and 19 properties are achieving an average yield of 6.7%.
By contrast those who own just a single property achieved yields of 4.8%.
On a regional basis, landlords with portfolios in the North West reported the highest rental yields at 6.7%.
Somewhat unsurprisingly, landlords with central London portfolios achieved the lowest average yields at 4.8%.
Alan Cleary, managing director of Precise Mortgages, commented: “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.”