Thinking of investing in a House of Multiple Occupancy (HMO)? It can be quite a bit of hard work initially and does need a lot of time investment if you're planning to do the management of the property yourself. However, the returns can be phenomenal when compared to investing in a buy-to-let. And, if a report published this month is anything to go by, as the owner of an HMO you shouldn't have to worry too much about attracting tenants in future - especially young professionals,
How so? Well, it's because rooms in HMOs are becoming the accommodation of choice for this growing sector of the population. Certainly, it's what the data in the report - commissioned by one of the UK;s leading student property investment companies - shows.
The survey revealed that the number of young professionals living in HMOs had increased within the past year by 15 per cent in some areas of the UK (notably the north east of England). The reason, according to responses from those interviewed and living in HMO accommodation at the time of the poll, included the fact that this form of housing was so much less expensive for them. In some instances it was costing nearly 50 per cent less than renting a house or proving far cheaper than renting even a room in a flat.
The preference for HMO accommodation shouldn't be too surprising considering that only two months ago the HomeLet Rental Index recorded the average monthly rent in the UK as £811 - an increase of 5.1 per cent compared to the same period the previous year. Understandably it puts renting a flat (rather than a room) out of the league of most graduates and young professionals who are still on a starter wage for their profession.
Another factor in favouring a room in an HMO is the fact that many young professionals have previously lived in good quality HMO accommodation as a student. They are also used to the dynamic of HMO living and happy to continue in such a fashion - especially if it means they have money for other interests. Another plus for HMO living is the fact most of these type of properties are in city centres - or at least within reasonable walking distance of restaurants, clubs and bars.
And finally, when renting a room in an HMO young people don't have to worry about property or garden maintenance issues or even falling foul of creditors since the bills are already taken care of by the owner of the property.
MD of Mistoria Group, who carried out the research mentioned above, claimed that many HMO properties now boasted high speed broadband, flat screen TV and even, in some cases, en-suite bathrooms. As a result young professionals certainly didn't feel as if they were missing out when compared to their flat-dwelling colleagues.
Last month the government-published English Housing Survey reported a similar increase in the number of young people in general opting to rent privately. Around 14 per cent of 25-34 year-olds rent it said, compared to the same period four years ago. And, not surprisingly, considering the stringent mortgage conditions demanded by finance lenders of late, far less young people are being their own home these days - 18 per cent compared to 21 per cent four years ago.
Young people prefer to rent
Then again, it may not all be down to money. There is an argument that also says young people are going more continental when it comes to their ideas about housing ie they no longer think it's best to buy but prefer to rent as a long-term answer. This is backed up by yet another survey - this time by the National Centre for Social Research and the Halifax - which showed that in a recent poll, around 36 per cent of young people aged between 23 to 27-year-olds insisted it was time for the UK to lose its obsession with home ownership.
In fact, a fifth of those interviewed said they had no plans to buy property themselves when the time came. They also believed that more people would be renting than owning homes in 15 to 20 years time. Some of this has to do with the idea of flexibility ie the ability to move regions or even countries when they felt like it, rather than being tied down to a mortgage and one particular locale.
If you've any questions about HMO investing or the current state of the market then do get in touch with us here at Property Go-To Girl. We'd be happy to advise and point you in the right direction.
I'm Jacquie the Property Go-To Girl. I am passionate about property. I love to help people make the most out of their property investments!