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What type of property investment brings in the highest yields?

In terms of buy-to-let investments, Houses in Multiple Occupation (HMOs) are a key feature of the future of renting.

Not only do they provide some of the best returns for landlords, but they provide affordable accommodation for a growing tenant population. 

HMOs are very popular investments because of their ability to achieve much higher returns than single lets. Since there are multiple tenancies operating in a HMO property, landlords are less affected when there are rental void periods. If one tenant moves out, there are still other rooms occupied. 

Demand for affordable housing is increasing, and cities in particular are seeing more demand for room rentals. Amongst many sectors of the public, but especially amongst students and young professionals, location takes precedent over the amount of living space. 

As a result of their increasing popularity, there has been an onslaught of government legislation in an attempt to prevent illegal overcrowding in properties. In recent times, this has had an adverse effect on HMO investment, with many good landlords choosing to exit the sector in anticipation of more penalising laws. 

This doesn’t mean HMOs are no longer valid investments, it just means landlords should get clued up on law changes in order to stay compliant and avoid hefty fines. 

There are still opportunities in single buy-to-let properties, but you are much less likely to achieve the strongest yields. If you are set on investing in a lower maintenance, single let property, investing in a property with two or more bedrooms could be a good idea, as a one-bedroom property can be harder to re-sell. 

More people are now dabbling in property investment, without even having to deal directly with tenants. Peer-to-peer loans (P2P) are growing in popularity for those wanting to be less hands-on with their investments. With peer-to-peer loans, investors lend money directly to individuals and companies. This type of investment is riskier, but offers the opportunity to achieve high yields. 

Crowdfunding is also becoming a popular way to invest in property without the stamp duty costs and strict regulations currently facing the buy-to-let industry. It differs from P2P in that you get a stake in a property, rather than in a loan secured against the property. 

Ultimately, there is no right or wrong way to invest in property. While trends can indicate which investments are offering the highest yields, nothing can replace quality research, planning and diligence. It is important to match the investment you have chosen to your objectives, circumstances and own experience. 

*Marc Trup is the Founder and CEO of Arthur Online 

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