Who would rent an HMO?
The target audience for an HMO property is likely to be wider than you think. Depending on where you live and what your local area is known for, you will have a few options to choose from.
Many different types of renters enjoy the benefits that come with this type of rental over a traditional long-term lease.
The flexibility of the HMO model provides –
Undertaking a 12-month commitment is not always feasible at every stage in life. Relocating for work, attending university in another town, or looking to be based in the city for part of the month are all suitable reasons to rent within an HMO.
Forward-thinking technology companies like to have their teams based together when they travel abroad to open new locations. And the rise of the freelancer and the digital nomad has meant shorter to medium term travellers looking for great internet and shared living space to meet other people.
No large deposit required
Most traditional lease agreements require at least one month’s deposit upfront along with other fees incurred in the rental process. The flexibility and short-term nature of an HMO agreement means that you are saving tenants money and providing a temporary solution.
Affordability matters at all ends of the HMO spectrum – even top business executives living in a new City for three months don’t want thousands of pounds of their money tied up in deposits.
The inclusive price of an HMO works out cheaper than having to set up all utilities and purchase all items individually for short stays. Even for stays of 6 to 12 months, some tenants would prefer to pay slightly more in rent to avoid the hassle of everything else that comes with renting a full property.
This type of complete package helps with budgeting and is suitable for those on lower or fixed incomes. It is cheaper to rent one room in a large house for most people, offering the possibility to stay in a nicer location that would have been unaffordable on their own.
Sense of community / security
Every August and September, tens of thousands of students move temporarily to their university town and living in an HMO with other students is one of the best ways to socialise.
Local authorities will use the HMO model to house patients who are dealing with similar issues. This provides them with a central point to provide the necessary support services that these people need.
Social areas and improved facilities
The provision of higher speed internet, communal dining spaces and maybe even some high-end additions such as a pool or a gym can make renting a single room in a larger space much more attractive.
These types of additional extras would not fall within the renovation budget of a traditional buy-to-let so this could be seen as a distinct selling point for some people.
The reasons for wanting to live in an HMO are as varied as the type of tenant that it will attract. As a potential investor, it can be difficult to work out what type of tenant is most likely to require a room in your preferred investment area.
This is where partnering with Hoxton Property can be very helpful. We have already dedicated thousands of hours to researching what target areas work best for HMOs. And we have a team of analysts that advise on exactly what those tenants are looking for.
Don’t be afraid to be specific! Profit is often found in the niches.