So, it is 2023 and the war in the Ukraine is still going on, the cost of living is continuing to rise, interest rates are also going up and the end is nowhere to be seen. It feels like a life time ago now when we all were locked up hiding from the invisible enemy called COVID-19 being furloughed at home.
So, what does all this hold for HMO’s and more specifically HMO Lettings in Stoke on Trent?
Well, that is a very difficult question because of all the variables that we have seen in the last couple of months. What I can tell you is what we see being on the ground and what the general questions are that we get form investors.
First off, the phone hasn’t been ringing like it used to from people asking what the market is like. What we have seen is that a lot of investors have been taking their HMO’s and turning them in to SA (Serviced Accommodation) or back in to a single let. Or in many cases and in my opinion the worst, selling off. It has now widely been reported that there is yet again a mass exodus from the market by investors and in doing so, making it even harder now for renters to not just rent but also to buy a house of their own.
The cost of living has really put a squeeze on costs when it comes to HMO’s. Couple of years ago having a 3 bed HMO would have made you good money. Now you won’t break even. Reason being is that energy prices and interest rates have shot up too much. On a 5 bed you still stand a chance of making money. The sweet spot at the moment will be 5 – 9 bed HMO’s. Because your costs difference between a 5 – 9 will nearly be the same but now you have more bedrooms that will secure you more profit.
The knock-on effect of people selling up or changing from HMO to SA or Air B&B is that the supply for rooms have shrunk, but the number of tenants looking for rooms haven’t decreased, if anything it has increased. At Hype Lettings we have such a low void rate that we don’t have any rooms to offer with the number of tenants looking for houses, which I suppose is not a bad problem to have. But as a lettings agent it generally is not a good image if you have nothing to advertise. But from the 264 rooms we have 3 rooms available.
A COUPLE OF PRACTICAL THOUGHTS:
1. If you have or planning to purchase an HMO, please make sure that you have
en-suits because people are not keen to share a bathroom anymore.
2. Please make sure that your house flows well and that the spaces that you create is warm and welcoming
3. Refrain from cramming as many people in the house as possible. This doesn’t work anymore.
4. Paint neutral colours, certain colours are making a comeback and dare I say it
certain shades of magnolia seems to be a hit with some landlords.
5. Make sure that the furniture that you are using is good quality,I can’t stress enough that this is the ‘make or break’ that tenants will see first, and it will be the motivator for them either taking the room or not.
