Why I Chose HMOs

HMO properties have been popular with investors for years, but for me this type of property has particular significance. 

 

Investing in Houses in Multiple Occupation, or co-living spaces as I prefer to call them, has allowed me to achieve many of my financial goals while giving me the opportunity to offer something that wasn’t readily available when I was starting out in life – good quality, secure, sociable and affordable accommodation for young professionals. 

As a student, I experienced the frustration and challenges of paying high rental costs for properties that were sub-standard and did nothing to enhance my standard of living or quality of life. 

 

This is often still the case; young professionals feel trapped in a rental market that offers little prospect of better accommodation, and this can continue into working life as they work hard to establish themselves or relocate for their first job. 

 

Young professionals, unable or unready to purchase their own home, can feel like they’re at the mercy of landlords interested only in securing the best possible return on their investment and spending as little as they can to do it. 

 

From the outset, I’ve been very clear on our mission to do better for young people, whilst earning significant ROI in the process. 

For me and the rest of our investor partners at JIMENY, Houses in Multiple Occupation provide an opportunity to offer a better standard of living to people who aren’t yet ready to buy their own home. 

 

We’re interested in making life as simple as possible for tenants by wrapping as many living costs as possible into one payment. This is an increasingly attractive proposition for many renters, which keeps occupancy rates high for our properties and provides better cashflow by reducing the risk of empty rental periods or rent arrears. 

 

HMOs tend to offer a better return on investment – in 2019, the National Landlords Association suggested that the average return for HMOs was around 6.9% (1.3% higher than non-HMOs*). 

 

The demand for quality HMOs is consistently high, as people enjoy the social benefits of communal spaces while still having a place to call their own, and there are potential tax advantages not experienced with single occupancy lets, such as a reduced VAT rate for HMO conversion costs. 

There are still some challenges with HMOs; not all properties provide the right communal and individual spaces to make a co-living space work and, once you’ve found a property, you will need to navigate legislation and specific planning requirements which apply to this kind of property. 

 

Finding HMO mortgages can also be harder and more expensive. 

 

Even when your property is ready for its first guests, the overheads and demand on your time can be greater, and you will be dealing with the administration and care of multiple tenants rather than just one. 

 

My decision to focus on creating beautiful co-living spaces has enabled JIMENY to develop a specialist knowledge, and our experience enables us to foresee and manage many of these difficult challenges. 

 

My time living in an HMO, my experience as a property developer, and the assistance I receive from my network of industry professionals all help to inform the decision-making process, but I am still learning all the time. 

Even though young professionals may move around more often, which can present a constant need to replenish occupancy levels, I believe that an attractive co-living space in the right location, where job prospects are good and transport links enable easy access to city centres, will always have a ready market. 

 

In my view, many landlords miss an opportunity by shying away from HMOs, or not providing tenants with a positive and supportive environment in which to live. 

 

Investing and managing property should create a mutually beneficial arrangement between the investor and tenant. Getting the balance right can offer a great communal living experience while generating a more secure return for your investment.