Landlords have a larger appetite for HMOs in a bid to boost their rental income by targeting young professionals and students, according to a report.
Multi-Let UK says it has seen a 150% rise over the past year in investors looking to purchase HMOs and multi-lets. A sister company has also seen a 300% year-on-year rise in potential investors paying to join a waiting list that flags-up refurbished and available HMO properties.
One reason for the growth is the incoming tax rises and changes to tax relief as well as the new stamp duty rules and the tightening of buy to let mortgage lending which will see landlords struggling to make profits.
The managing director of Multi-Let, Daniel Hill, said: “Investors recognise the opportunity to boost their rent from a property that is home to multiple occupants and who pay rent separately.
The attraction of HMOs
“The tax hikes for investors and landlords have made them look again at portfolios and how to boost rental income and profits. The attraction of HMOs is rent does not need to be raised if the profitability of lots of tenants is higher than a standard property.”
However, he highlighted that HMOs are more complex to manage and need to be licensed by the local authority and also the repair and maintenance bills are higher – but their profitability is much higher than standard investment property.
Multi-Let says that many standard properties around the UK can be converted into HMOs successfully with C4 building regulations and with a high quality refurbishment the property will attract working professionals, if it is in the right location.
To earn the best rents from this market, landlords should offer properties that have luxury ensuite facilities, premium kitchen appliances, large TVs and quality furnishings to generate high yields.
Mr Hill said: “HMO models are complex to manage but despite this can be profitable.”
More retirees looking to rent
Meanwhile, a survey has revealed that the growing numbers of people who have retired are looking to rent their home during their retirement.
The findings come from Girlings Retirement who say renting is becoming popular because of the various benefits that come with renting a home and they are experiencing larger numbers of enquiries from those wanting to downsize and sell their property so they can rent somewhere smaller
By doing so, the firm says, they can release capital and then use this for investing in their future.
The firm’s Peter Girling said: “This is a chance for people to start afresh somewhere they want to live and renting frees them from the financial burden that comes with owning a property.”
