House in Multiple Occupation (HMO) properties are an increasingly popular investment choice for landlords in the UK. A recent survey conducted by Dataloft PriceHubble has provided useful data on the profile of HMO investors, shedding light on their motivations, challenges and the current state of the market. Tin this article we explore the findings of this survey.
Sole Source of Income for Many Landlords
A significant finding from the survey is that around half of HMO landlords use their property or portfolio as their sole source of income. This statistic underscores the financial viability of HMO investments, as many landlords have found it sustainable enough to rely on entirely. For these landlords, their properties are not just a side investment but their primary means of earning a living.
The Challenge of Self-Management
Despite the complexities associated with managing HMO properties, nearly half of the properties surveyed were self-managed by landlords. This indicates a high level of involvement and dedication from landlords who choose to oversee their properties directly. Self-management can be demanding, requiring a hands-on approach to tenant relations, maintenance and compliance with legal requirements. However, the willingness of many landlords to take on these responsibilities reflects their commitment to maintaining high standards and ensuring the smooth operation of their investments.
Common HMO Portfolio Sizes
The survey revealed that the most common HMO portfolio size among investors is relatively small, with 34% of landlords owning between 4-10 properties. This suggests that many HMO investors prefer to start with a manageable number of properties before potentially expanding their portfolio. Smaller portfolio sizes can offer more control and allow landlords to focus on providing quality accommodation, which can be crucial for attracting and retaining tenants.
Confidence Amidst Regulatory Challenges
Despite the proposed rental reforms and the implementation of local authority licensing schemes, confidence in the HMO market remains robust. These regulatory changes are designed to ensure better living conditions and more responsible management of HMO properties. While they may introduce additional compliance requirements for landlords, the ongoing demand for well-managed house shares due to the housing shortage has maintained investor confidence.
The Role of the Housing Shortage
The persistent housing shortage in the UK continues to drive demand for HMOs. With many individuals seeking affordable and flexible living arrangements, HMOs provide a viable solution. Well-managed house shares are particularly attractive to students, young professionals and those seeking temporary accommodation. This ongoing demand ensures that well-run HMO properties remain a valuable asset for investors.
The Future of HMO Investments
Looking ahead, the HMO market is poised for continued growth. As the housing crisis persists, the need for affordable shared accommodation is unlikely to diminish. Landlords who can navigate the regulatory landscape and maintain high standards of property management are well-positioned to benefit from this demand. The potential for high rental yields makes HMOs an appealing investment option, despite the challenges involved.
For landlords considering entering the HMO market or expanding their existing portfolio, now is an opportune time to act. The strong demand for well-managed house shares, coupled with the potential for substantial rental income, makes HMOs a promising investment. At Northwood estate agents, we offer expert advice and comprehensive property management services to help you succeed in the HMO market. Contact us today to learn more about how we can assist you in maximising your investment potential.
