What’s an HMO property and which advantages has it?

If you are thinking about investing in a buy-to-let property in the North West of England, you shouldn’t fail to consider the HMO option, also known as House in Multiple Occupation or multi let investment. This type of investment has been a hot topic amongst investors in the last decade because of the potentially high yields it can achieve.

If you are not completely clear on what an HMO property is and its benefits versus a regular buy-to-let, continue reading this article.

What is an HMO?

A house in multiple occupation is a property rented out by at least 3 people who are not related to each other or part of the same ‘household’ like a family, but share facilities like the bathroom and kitchen.  Student properties for example and house shares are HMO properties.

You must have a licence for your HMO if the property is:

  • Rented to 5 or more people who form more than 1 ‘household’

  • At least 3 storeys high

Which are the advantages of a multi let?

  • Renting your property as an HMO you can achieve a much higher rent than you would renting the property as a whole to a single family unit.

HMO properties allow you to charge rent on a per room basis.  For example, a 5 bedroom house might have a market rent of £1,200 when let to a single family.  But if the same property were let as an HMO for £400 per room, the potential rent could be £2,000.

Why is the North West a good place to invest in HMO?

HMO properties work better in areas with a high student and young professional concentration.

Considering that in most cases these types of people move on their own and for a defined period of time, the multi let option becomes the most suitable for them. This type of accommodation allows them to choose the most convenient location and the fact that bills are often included in the rent is another key ‘selling’ point.

With around 20,000 students at the University of Salford and almost 70,000 in Liverpool, the North West is an ideal place to invest in HMO properties.

Which are the risks of HMO investment?

Along with the cash flow benefits, there are one or two potential risks with this strategy:

  • Tenant turnover can be high which means a lot of effort on your part as the landlord to keep finding new tenants

  • HMOs / Multi lets need to be managed very efficiently to ensure maximum occupancy. If one or two rooms are regularly empty then this can wipe out any profit you might otherwise have made.

These risks can be diminished if you invest with the Mistoria Group. We will help you in the process of finding the most suitable investment property, but we will also take charge of all the legal paperwork and management of your property to make sure you get the most of it.  If you are interested in investing in an HMO property, why don’t you call us today on 0161 707 6106 or email info@mistoriaestateagents.co.uk?  Have many suitable HMO properties for sale in the Salford and Liverpool areas.

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