With the Summer Holidays drawing to a close and the new academic year chomping at the bit to get going, now is a good time to review the performance of your investment properties.
Investing in HMOs
Investing in HMO’s has become increasingly popular as the number of one-person households looking to rent increases and rents skyrocket.
What is an HMO?
HMO stands for ‘House in Multiple Occupation’ and applies to properties that are rented out by at least 3 people who aren’t from the same household but who share facilities like bathrooms, toilets and kitchens.
Why are HMOs on the up?
The Office for National Statistics’ most recent survey found that one person households have risen to 7.7 million up by 16% from 1997 to 2017; it is forecast that this will rise to at least 10.7 million by 2039.
There are two major factors that has caused the distinct rise:
- an increase in the numbers of older people with limited income needing to rent;
- many one person households opting for shared accommodation to ease financial pressure and enjoy a better lifestyle.
Why could they offer a better return?
Property Investments UK give the following reasons why an HMO can offer better returns than a standard buy-to-let:
- Rental yields can be as much as three times higher.
- There are less (impactful) rental void periods, if one tenant moves out, you still have other rooms tenanted.
- There is less exposure to arrears. With multiple tenants, you are less exposed if a tenant falls behind on their rent as there are other tenants that are still paying.
How can we help?
We’ve been specialising in HMOs for many years. If you would like to explore the idea of investing or developing an HMO for rental, get in touch. We’d love to help.