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The Hunt For HMO Rental Yields

Property Technology Blog

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When it comes to returns on investment in property – the more really is the merrier, as the adage goes. Homes in multiple occupancy, or HMOs as they’re more commonly known, have proved to be a great 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. 
Although HMOs, which appeal to both young professionals and the student market, can be a great investment with a solid return, it can be harder to secure a mortgage on an HMO.  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 property licence from the local council in order to do so and may need to do some work to get the property up to spec.

Increased HMO rental yields

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 agent or landlord managing an HMO property ensures that they have sufficient strategies in place to deal with any issues, especially with regards to maintenance.  

Managing the extra rental work on your HMO

Of course with extra tenants comes extra work, especially if the property has been converted into multiple flats or individual bedsits.  Communication is the key here – giving your tenants a channel to contact you promptly when there’s a problem,  before it mushrooms into a myriad of other concerns or knock on issues. 
 
For private landlords who are managing a HMO, the extra workload can come as a slight shock. 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? 
 
Choosing an agency that uses a Fixflo repairs system can help to reduce the cost of your maintenance bills and ensure that your tenants are receiving a top quality service. 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.
 
 
If you've found this blog useful, we also have a whole library of free guides and ebooks for letting agents and property managers. Or, take a look at some of these guides below...
 

How to get a property licence email bannerHow to Get a Property Licence

Property & HMO Email bannerOverview of Property & HMO Licensing

Future of Lettings Email banner_Technology_8-4Future of Lettings: Technolgy

Zahraa Valu

Written by Zahraa Valu

HMO's | house of multiple occupancy

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