The Boom of the HMO (House in Multiple Occupation)
11th November 2015
... Comments

The buy-to-let property market continues to grow rapidly, with more people looking at property investment as an additional form of income for now and their future alongside their pension or ownership of business. 

For the landlord, property rental is profitable and the market continues to increase, because it’s becoming increasingly difficult for people to own property.  Recently, it has been claimed the first time buys require an income of around £50,000 per annum in order to get onto the property ladder.  Therefore, more and more households are renting properties.

Although the buy-to-let market is increasing, there’s also a boom for the HMO (House in Multiple Occupation), but what does this mean? It’s where a property is rented out to more than one household.

“A house which is occupied by three or more unrelated persons who do not form a single household.” The Housing Act 2004

A house in multiple occupation could be populated by students for example.  These are tenants who do not make up a household, but would share bathroom and kitchen facilities within a house.  With slightly reduced rates for the single occupant or small family, an HMO is often an option, due to a lower income.  Whilst landlords are profiting from the HMO, there’s certainly a lot for them to provision for, particularly the guarantee of rental payments, where they will require a guarantor.

Although there’s a faster and higher return for the HMO landlord, their property maintenance costs are higher, possibly from a higher turnover of occupants.  Landlords of HMOs also have to ensure they adhere to regulations, such as fitting smoke alarms within all of their properties etc.

Aside from the additional regulations and licenses that are required for HMOs, they are profitable with the increase of the student market, Universities are becoming increasing influential within cities and towns across the UK and also have a growing influx of international students.  There’s also the increase of families moving into the UK from other countries, who’s only option of affording accommodation is to be part of an HMO.  Finally, the HMO works well for those who moving around the country for work, maybe being part of an HMO during the week or because it’s preferable and affordable compared to renting accommodation solely. 

Any or all of these situations are making a larger profit for the property investor, as they are offering accommodation at a lower rate to multiple tenants and the trend continues to increase.  To seek advice on HMO options and talk about services that are offered for assistance, speak to Vincent Giddings in Stevenage, as this is a great area to explore the opportunities for the HMO as a profitable buy-to-let option.

Popular Categories