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Have you considered renting your property as a HMO; A House in Multiple Occupations?
Rising rents have forced over 100,000 more renters into the flat share market over the last year, according to the latest research from easyroommate.co.uk. The cost of flat sharing is considerably cheaper for tenants than renting a property as a whole house.
According to the latest statistics, instead of paying the average of £700.00 for a house as a whole, tenants in a house-share spend on average £340 each, not to mention saving money on utilities and council tax.
Here in our letting agency in Newport, we have discovered a rise in people looking to flat-share. In the past it seemed people only in their late teens were looking to share now it has considerably changed to people in their late 20s to mid 30s.
The low level of lending to first time buyers has driven many into rented accommodation. This has driven rents in the wider rental market – driving down the affordability for many renters, ultimately pushing people into HMO’s.
According to Newport Council, in order for a property to be considered a HMO it must be:
- Occupied by 3 or more people, forming more than 2 households, sharing amenities e.g. bathroom and kitchen facilities.
- Converted into self-contained flats, but does not meet the requirements of the 1991 Building Regulations and at least one third of the flats are privately rented.
- Occupied by 3 or more people, forming more than 2 households in a converted building that is not entirely self-contained e.g. a basement flat with shared accommodation in a maisonette at ground & first/second floor levels.
Most people believe house shares to be ‘too much hassle’ and far more complicated than renting the property as a whole house to one family. However, the returns on renting a property as HMO are far higher than that of a normal property.
Many people think that students, the main occupants of HMO’s, party all night, sleep all day, and squeeze their studies in where they can. As for looking after their homes, the popular stereotype is that they can’t use washing machines and can’t be bothered to wash up.
But while that may be true of a minority, today’s students are altogether more focused on their studies, and a world away from those stereotypes. They also make excellent tenants for landlords who want to achieve a good rental yield, potentially strong capital appreciation and minimal arrears.
While it’s not always the case, the practice of paying the rent in advance at the start of each term is still widespread in the student lettings sector. Clearly this takes away one of the biggest risk factors for landlords – rental arrears.
Even if the rent isn’t paid up front, landlords have another safety net because in most cases the student’s parents will usually act as guarantor for the rent if the child cannot pay it. This is another huge benefit for landlords operating in this market.