Why opt for HMOs?
We live in a fast-moving world where trends come and go. It’s hard to fathom that just 30 years ago our home computers had far less power than what’s in our phones now. Information gathering was often a tedious task, involving trips to the library in the hope you could find what you needed. Now we complain if the WIFI is slow and the information does not load instantly, those precious few seconds wasted with a slow connection seem like an eternity. Times have definitely changed, and we are now a much bigger population than we were back then. For this reason, the one thing that will never change is that there will always be a demand for affordable housing, and as this demand grows, so must our strategies to fill that demand. HMOs have become more and more popular in the last while as they are a great way to cater for this increase in demand.
How Do HMOs Work?
Most landlords end up going the same route when looking for tenants. They usually rent to couples or to a family, set up property inventories, sign the contract, and the building is full. Basically, they are renting to one entity. But renting rooms separately can have some major benefits to both parties. Firstly, the pressure that is in place for houses is lessened, as each house can be rented to a number of different groups or individuals. This increases the capacity a building can hold as multiple groups can share the same building. For the tenant, this results in more affordable accommodation, as they are basically sharing the entire cost for the building. Also, the landlord will get more income once the entire building is leased. So, this seems like a winning situation for everyone.
Where to Start with HMOs?
For the tenant, the benefits are obvious, more affordable accommodation. For the landlord the work is more or less the same, you still need property inventories and contracts, but the extra work comes from getting the clients. There are many sites such as SpareRoom or RoomClub that can help you find a shared flat or flatmate in the UK. They also show what demand there is and will give you a better insight into pricing.
What Else Do I Need to Do?
Once you have a feel for an area in demand, then it’s just a matter to set up a suitable building. Bear in mind there is extra work with HMOs in return for the higher yield. Maintenance and bills will be increased, and you will need extra inventory. Separate property inventories and contracts are a must and make sure you realize there will be a bigger time demand than with a single-let building. If you are trying to scale your operation, it might be worthwhile to hire a management agent to alleviate some of the time that is required, see Inventory Hive. HMOs can be a lot more work, but with a higher ROI possible, it is definitely worth considering.