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HMOs: The Hunt For Yields

Property Technology Blog

When it comes to returns in property – the more really is the merrier, as the adage goes, because houses with multiple occupancy, or HMOs as they’re more commonly known, have proved to be the best way to get a good return on your property. But, although renting out a property to multiple occupants, all on different tenancy agreements, may generate more money, without the right management, it could end up costing you more cash too. 

And, although HMOs, which appeal to both young professionals and the student market, are the fast track to a hefty return, it can be harder to secure a mortgage on an HMO, as lenders tend to see them as a riskier investment than a single-tenanted property. Those wishing to rent out their property to multiple unrelated tenants also have to apply for a licence from the local council in order to do so. 

Landlords who clear these hurdles and have sufficient capital to enter the market, should appreciate that while HMOs yield a tidy 9% yearly return (compared to between 5 and 6% across the mainstream market), multiple tenants can mean multiple issues too. This means it’s imperative that an HMO lettings landlord ensures that they’ve got sufficient strategies in place to deal with each and every tenant and each and every problem.  

Communication is the key here – ensure that your tenants can contact you promptly when there’s a problem, giving you the chance to solve it at source, before it mushrooms into a myriad of other concerns.

For those landlords who feel that the increased nature of tenant interaction that the increased number of tenants in a property causes is too much, taking on a managing agent is an effective way to ensure that your tenants are managed professionally and painlessly. 

The lesson for landlords looking to get into HMO lettings is a simple one – it is possible to make a more money in this market but with greater profit comes greater responsibility. The higher return generally means harder work, so why not get somebody else to help you out? Then it really is a case of the more the merrier.  

From your perspective, choosing an agency that uses a Fixflo repairs system can help to reduce the cost of your maintenance bills.

Fixflo, which is the UK’s leading repair reporting system for managed rental UK properties, boosts first time fixes and even filters out the smaller issues (of which 12.5% of all calls can be attributed to) that tenants can deal with themselves.  By offering tailored guidance to the tenants on how to resolve their issues Fixflo helps professional property managers to cut down on call-out charges payable by their clients. 

To find an agency in your area that uses the Fixflo system click here.

Zahraa Valu

Written by Zahraa Valu


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