Owners of London houses in multiple occupation (HMOs) rarely put them up for sale, meaning investors likely need to convert a residential home into an HMO to get into the market, according to research by Octane Capital.
Octane Capital compiled data on the levels of HMO stock across different regions of England, as well as the amount being sold.
London had by far the most HMOs in England.
Across the capital there were some 83,900 HMOs, accounting for 38.7% of the total in England.
However, just 164 were listed on the market, a ratio of just 0.2%.
Previous research by Octane Capital found that HMOs housing four tenants typically net investors a monthly rent of £593 per room or £2,372 per month.
This brought average yields to 8.1%, surpassing the 4.4% achieved on a regular four-bed property.
However, finding a home that already operated as an HMO listed for sale was challenging, even outside London.
Across England only 1.6% of the 217,000 HMOs were currently listed for sale.
In the South East, there were 654 listings, more than any other region, accounting for 19.4% of all current HMOs listed for sale.
The North West also ranked high in this respect, with some 507 HMOs currently on the market, accounting for 15.1% of national stock for sale, with the East Midlands ranking third with 448 current HMOs on the market.
Jonathan Samuels, CEO of Octane Capital, said: “London is by far the toughest region when it comes to finding a ready made HMO for sale.
“Yes, it may have a hefty supply of stock, but owners of HMOs are seemingly in it for the long haul in the capital, and are showing a lack of appetite to sell.
“As a result, you’re better off buying a residential or commercial property and converting it into an HMO in London, despite the challenge of gaining permissions.
“Finding an HMO for sale can often feel like looking for a needle in a haystack, but you’ll have an easier time if you stick to regions like the South East, the North West and the East Midlands.”
