Are you thinking of becoming a landlord? Maybe you’re already a landlord, but want to grow your portfolio? Then House of Multiple Occupancy (HMO) properties could be the key to building your financial future.
New research from Landbay, a buy-to-let lender, shows that half of all HMO landlords rely on their properties for their entire income. This means they don’t have a “regular” job and rely on their rental income to pay their bills.
This shows that HMOs are more than just a side hustle – they can be a serious business.
HMOs: A Growing Trend
This latest research shows that HMOs are proving popular with investors. Three quarters (72%) of HMO landlords own their properties through a limited company, a sign of serious investment and commitment.
Landbay’s Rob Stanton says that “Despite proposed rental reforms and local authority licensing schemes, the market remains resilient.” He adds that “With an ongoing housing shortage, demand is stronger than ever for decent and fairly managed house shares.”
HMOs: The Numbers That Matter
HMO landlords are benefiting from falling utility bills and a recent change in the way council tax is calculated. These changes have made it easier for HMO landlords to borrow more against their property value and potentially boost their profits.
HMOs: Don’t Go It Alone
Almost half of HMOs are managed by the landlord themselves, with a third of these landlords owning 20 or more properties! This shows that many landlords are confident managing their own properties, especially if they have a smaller portfolio of 4-10 properties. However, as the number of properties grows, it may be worth considering a professional property management company.
HMOs: Where to Invest
The highest concentration of HMOs is in London and the South East (47%), with the East Midlands following closely behind. This doesn’t mean you need to be in these areas to make money from HMOs, but it shows that there is strong demand for these properties in these regions.
HMOs: The Bottom Line
HMOs can be a profitable investment, but like any investment, research is key. If you’re considering investing in HMOs, make sure you understand the legal requirements and the risks involved. With careful planning and good management, your HMO portfolio could be the foundation for your financial freedom.