HMO stands for houses in multiple occupation or houses of multiple occupancy. This kind of let involves three or more tenants who are not a family and so there are shared facilities such as bathrooms and kitchens in the property. Often it is students sharing a house while studying but it can also be any individuals who are happy to share living space with others.
This kind of letting offers many benefits, including –
- The rental yields can be significantly higher than a single-let, as you have more than one tenant.
- You are less at risk of rent arrears and periods of the property standing empty. The fact of having more than one source of rental income from the HMO is very useful in case one of the tenants falls behind in rent payments or moves out.
- There is increased demand for this kind of rental arrangement, as the population of the UK is rising and many people are struggling to purchase their own home.
Some things to bear in mind when joining the world of HMO letting –
- Make sure that you get some references for your prospective tenants, as they will need to be able to live peacefully with the other occupants and respect the property too. The fact that you tenants will likely be students or low income individuals means that you may have to work with job centres, the Citizen’s Advice Bureau and other welfare agencies.
- Set a standard for your property in terms of what kind of tenants you will accept and how the multiple occupancy will work in practice. The nature of HMO is that the turnover of tenants will be higher than a single let, so make sure you set the bar high as you see the flow of tenants change.
- Any repairs that need to made to the property will have to be done quickly, as these can cause friction between tenants. One tenant is easier to deal with than 5! It’s wise to keep an eye on the property on a regular basis rather than just the 6-monthly check you would make with a single let.
The rewards of HMO are great and so it is worth taking some time to plan out how you will go about this new and exciting project.
Here at Nick Fox Property Mentoring, we provide mentoring services and other resources to help you when it comes to property investment. Find out more about our property mentoring here and our resources here.
Trackback from your site.