The market for Houses of Multiple Occupation (HMO) looks set to grow as the fallout from the COVID-19 pandemic starts to settle, which is good news for landlords looking to grow or diversify their buy-to-let portfolios.
This market growth is expected to be driven by some fundamental changes in the way people, who could be potential HMO tenant types, want to live:
At the same time, HMOs are increasingly appealing to investors particularly because of their potential for higher than average rental yields when compared to other property types.
Other factors such as the growth in competition among HMO mortgage lenders, as they recognise the commercial attractions of this sector, has led to better HMO mortgage rates being available which in turn opens up opportunities for potential investors.
This market environment presents a number of opportunities for landlords looking to diversify their portfolios.
Overall, the property market has been buoyant during the last 6 months and according to a recent survey by Deposit Protection Service (DPS) and Zephyr Homeloans the ‘opportunity to buy at a discount’ is driving many landlords to increase their portfolio. The survey revealed that 34% said they had either recently purchased another buy-to-let property or intended to buy one within the next nine months.
With over 17,000 stores closing on Britain’s high streets, the government and local authorities are looking for ways to revive town centres across the country. From August, planning restrictions will be relaxed and developers will find it much easier to obtain permission to convert retail space into housing. This may well boost the HMO market, offering more potential for landlords and tenants at the same time as breathing new life into our towns.
A recent survey from the DPS showed that the pandemic has triggered a desire for many people to move away from big cities and to relocate to more provincial towns and villages. This has a two-fold impact. The first is that you may be able to secure a city dwelling suitable for HMO living at a good price as demand slackens and you can look to invest in properties outside the cities to cater for those looking to relocate.
There are three key drivers for the anticipated rise in demand for shared living:
One key aspect of most people’s working life that has changed as a result of COVID-19 is the rise of working from home. Smart landlords are now adapting their properties to better accommodate tenants’ requirements for a space to work in. If you can provide your tenants with good WFH facilities then you’re likely to make your properties more attractive and charge a higher rent.
As an independent specialist broker, we have in-depth knowledge of the HMO market and access to the latest offers when it comes to finding you the best mortgage finance deal. Our helpful advisers can get you an HMO mortgage quote and guide you through the process to ensure you get the right HMO mortgage from a range of lenders such as Paragon, Lendinvest and Aldermore.
Contact us today and find out how to maximise the potential of your HMO portfolio.
* Q4 2020 Landlord Panel research from BVA BDRC