The Growing Demand for HMO Properties
What is a HMO?
HMO stands for House in Multiple Occupation. These houses are multi-let properties tenanted by 3 or more people who are not related to each other. The tenants share communal facilities such as bathrooms and kitchens.
A HMO Property could be a:
- - Shared house
- - Hostel
- - Bedsit
- - Individuals sharing self-contained flats
- - Privately owned halls of residence
- - Refuges
The tenants can be:
- - Students studying together at University or College
- - Professional people sharing a house to save on costs
- - Asylum seekers and immigrants
- - Social benefit tenants
Younger people unable to finance their own property purchase often live in HMOs. Add to this, increasing rents and difficulty in obtaining finance and you will find other groups of people that would not normally live in shared accommodation also considering this type of living arrangement today.
The advantages of HMO Properties
Owning a HMO property has many advantages for the landlord including but not limited to:
- - Higher rental yields meaning more money in your pocket.
- - Potentially fewer voids if you are letting out individual rooms as opposed to the whole house. If one tenant fails to pay the rent one month, chances are you will still receive some income from the other tenants in the house.
- - More availability of tenants as this market is growing and is projected to grow further in the coming years.
- - As a landlord, you may also qualify from a local council incentive.
The downsides can be additional effort in managing the property and also increased wear and tear. However, if you were to employ a good letting agent to manage your properties for you, a lot of the risk can be minimised.
“With the new stamp duty costs for second homes and the changes in landlord tax, savvy investors are looking for a way to increase yields to keep their investment as profitable as possible. By doing room lets through a HMO it means they can usually achieve between 10-15% gross yields compared to 5-6% with the property let as a whole”, Laura Fiddes-Baron - M.A.R.L.A, Branch Manager - Lettings
How Robert Oulsnam & Company can help
If you own a property and are considering renting it to sharers, we can have a look at it for you and with our knowledge of the local market can advise you on whether it is a realistic proposition or not. We can also help you grow your property portfolio and ensure you have the right systems in place to succeed.
Robert Oulsnam & Company has an established lettings office that actively manages HMO and non-HMO Properties in the West Midlands and Worcestershire. If you’re looking to buy a property for sharers or already own one and would like to partner with us, please get in touch.