Why choose an HMO?
Growing demand: As previously mentioned, tenant demand is high and isn’t slowing down any time soon. In fact, analysis of the UK housing market indicates that tenants renting privately could make up more than half of the housing market in 20 years. Multi-let properties (including HMOs) are hugely popular with the 25-34 year old demographic, which makes up 32.6% of tenants according to research by the RLA. Added to this is demand from students, for those landlords who are willing to go down this route, which has huge potential if you target major university towns and cities. More information on this can be found here. University towns and cities are also a great target for those looking to accommodate young professionals.
High yields: HMOs have the potential to offer the owner higher yields than a traditional rental, with research from the National Landlords Association showing that average returns for HMOs are around 6.9%, which is 1.3% higher than non-HMOs. For a comprehensive, simple way of working out your potential returns, download our free return on investment calculator tool below to help you work out costs and potential income.
Less impact from voids: Because of the nature of an HMO, where rooms in a house are rented out individually, you are less likely to face significant void periods where you have no rental income. Void periods are something all landlords must factor in when calculating their costs, but the risk is offset in an HMO.
In the unlikely but unfortunate event that you have a tenant who refuses to pay, there will still be income from the rest of the HMO to minimise the effects.