Commercial Rental yield calculator

Use our commercial rental yield calculator to determine yield from your property investment. Many developers are now viewing the addition of high yield rental properties in tandem and in addition to their bread and butter development projects. Rental yield is annualised rental income expressed as a percentage of value. Does an HMO development project offer a viable ROI. Many landlords are now fleeing the industry due to increasing regulatory pressure. Wales is currently seeing the greatest exodus and this is largely attributed to the Renting Homes (Wales) Act. Sales also encouraged by the current high sale prices across the UK.

A Rental Yield Calculator For informed decisions!

While this may well return a substantial number of properties back to the housing stock it may well also serve to drive rental yields higher due to a lack of rental properties.  Are HMO’s still the safe bet that they once were? The commercial rental yield  calculator will give you an instant snapshot of rental yield. This helps when comparing HMO properties and MUFB’s. Multi Unit Freehold Blocks have also come under the spotlight recently in what is widely being described as a stealth tax by HMRC. According to a recent investigation by The Daily Telegraph the Revenue are focusing on areas with the highest concentration of HMO’s. The recent flurry of activity has seen these rental properties reclassified in order to generate more tax. This is adding to the already burgeoning load of red tape that has flooded the sector in recent years.

Are HMOs still a safe bet?

The thrust of this re evaluation would appear to be towards an end result of swelling local authority coffers. Whether it be an HMO or MUFB property a 6 bed property may well now be re classified as 6 separate dwellings. Though it is under wider debate as to how an HMO with shared facilities can be revalued as 6 separate dwellings. The re evaluation, logically, would be construed as those units with their own cooking and toilet/shower facilities under 1 lock and key.  MUFBs will have self contained units with a dedicated private entrance and under a separate AST. An HMO will have a shared kitchen, bathroom and communal areas. This said HMO rental properties with 10 beds and upwards within a limited company/SPV (Special Purpose Vehicle) still represent excellent returns of 10% or more. Especially in current hotspot areas such as Coventry, Leeds, Hull, Warrington, Sheffield, Nottingham and Leicester. This also enhanced by the lower cost housing comparables with university towns in the south such as Bath and Bristol where comparable yields are much lower.

HMO property and C3, C4, Sui Generis Class Use

The rental yield calculator allows you to work out the gross and net rental yields on any individual property or the entire portfolio of your lettings business and/or complementing your developer business model with rental revenue. As per our recent blog post there are a number of opportunities opening up under commercial property permitted development though HMOs are saddled with a more complex planning regime. If the HMO rental property is let to 7 or more people planning permission will be required. Furthermore this planning falls under three main types of planning that being C3, C4 and Sui Generis Class use. Further checks need to be carried out as to establishing whether the area is within Article 4 direction meaning that the local authority has imposed restrictions. Class C4 and Sui Generis are the classes that concern HMO properties with Class 4 Use  covering up to 6 unrelated people. Sui Generis is actually Latin terminology meaning “a class of it’s own” and covers most non-standard properties inclusive HMOs with 7 (and over) unrelated persons.

Article 4 and Permitted Development Rights

Class C4 of the Town and Country Planning (Use Classes) Order 1987 (as amended) (UCO) makes provisions for a dwelling house as HMO but no more than 6 (unrelated) residents. While the GDPO created a permitted development right allowing landlords to change a C3 property to a C4 HMO without the need for planning permission some areas of London though this is no longer in operation. Many local authorities are now using Article 4 of the Town and Country Planning Act 1990 (as amended) (TCPA) to remove these permitted development rights for change of use from C3 to C4.