HMO properties produced the highest yields in the first quarter of 2018, at 7.1 per cent - 1.3 per cent above the market average, according to 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 per cent.

The stats feed into the latest research from Simple Landlords Insurance – showing both HMOs and flats as areas of growth, attracting more investment from emerging and growing landlords looking to maximise profits.

Across all property types average yields fell marginally in Q1 2018 to 5.8 per cent from 5.9 per cent 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 per cent.

By contrast those who own just a single property achieved yields of 4.8 per cent.

On a regional basis, landlords with portfolios in the North West reported the highest rental yields at 6.7 per cent.

Somewhat unsurprisingly, landlords with central London portfolios achieved the lowest average yields at 4.8 per cent.

Alan Cleary, managing director of Precise Mortgages, said: “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.”