In recent years, the concept of House in Multiple Occupation (HMO) properties has gained significant traction within the real estate market. As the demand for more affordable housing continues to rise, HMO properties offer a lucrative investment opportunity for individuals looking to enter the rental market. Becoming an HMO landlord can be rewarding, but it does require careful planning, understanding of legal responsibilities, and adherence to specific regulations.
HMOs are properties where at least three tenants live, forming more than one household, and share basic amenities like kitchen and bathroom facilities. As a landlord, your property must meet certain standards to legally operate as an HMO. Familiarise yourself with the local regulations and licensing requirements in your area.
Before becoming an HMO landlord, conduct thorough market research to identify areas with high rental demand and shortage of affordable housing. Analyse the local property market trends and assess the potential profitability of your investment. Evaluate the costs involved, including property purchase or renovation costs, to ensure a sound financial footing.
HMOs typically tend to be in clusters, especially in the case of student properties. Research into different areas to see which ones would suit your ideal tenant. If you are hoping to attract students, look for a property in close proximity to a university, or if you’re hoping for young professionals look for a property on good transport routes to and from high business areas.
Selecting the appropriate property is a key step in establishing a successful HMO business. Certain houses are better suited for HMO set-ups than others, and many experienced HMO landlords opt for older Victorian properties due to features they can use to their advantage. These properties typically boast large rooms, high ceilings and plenty of space making them ideal for accommodating multiple tenants.
However, investing in older properties does come with its challenges. Often, these houses require significant work to meet the necessary standards and regulations. Common items that should be addressed include damp problems, outdated or sub-standard electrical systems, single-pane windows, inadequate insulation and a lack of parking facilities.
Despite these challenges, with careful planning, research, and renovation, these older properties can be turned into attractive and functional HMOs.
Securing funding is a crucial aspect of setting up your HMO business. HMO mortgages differ from regular residential mortgages, and lenders often have a specific criteria. Consult with financial advisors and HMO mortgage brokers to find the best mortgage deal tailored to your needs.
Our team at Vincent Burch Mortgage Services are on hand to share their extensive expertise in the specialised HMO mortgage market. We offer personalised, professional and unbiased advice to guide you through every aspect of your investment journey.
Our whole-of-market approach means we have access to specialist lenders such as Lendinvest, Landbay and Aldermore and can secure a mortgage deal tailored to your individual needs.
Once you’ve acquired the property, you should set up your HMO business legally. Register with the local council, obtain the necessary licences, and comply with safety standards. It’s advisable to consult with legal experts or property management companies to ensure you fulfil all legal requirements
Once your first HMO property is up and running successfully, consider expanding your portfolio. With experience and a proven track record, you can explore new investment opportunities, diversify your property portfolio, and increase your rental income.
HMO properties can offer excellent returns on investment if managed effectively. Create a pleasant living environment for your tenants, consider offering furnished rooms, and provide items which cater to their needs. Building that positive landlord-tenant relationship can lead to longer tenancies and positive word-of-mouth referrals, helping you to scale your HMO business.
If you are considering a limited company structure for managing your properties, then get in touch with us at Vincent Burch Mortgage Services. We’re here to offer practical, down-to-earth advice and we’ll help you figure out the best finance options without the confusing jargon, and you’ll have access to lenders you won’t find on the high street.
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