5 Ways To Optimise Tenant Satisfaction & Retention In HMO Properties (And Boost Your Profits)

Interest rates have been climbing and inflation remains at high levels. We’ve been facing a cost-of-living crisis, and it can feel like we’re swimming against the tide! So, improving profits in your HMO properties may sound a little mad at the moment.

But here’s the thing… We can’t control these external factors, yet we continue to be distracted by them. We can’t magically make interest rates drop or inflation disappear, but what we can do is focus on what’s within our power. And two factors we can control that can be game-changers for our HMO businesses are tenant satisfaction and tenant retention.

I know there’s more to profitability than just these two areas, but these can have an immediate and significant impact on the bottom line of your HMO business. Read below or listen to the full episode on The HMO Podcast for five ways to optimise tenant satisfaction and retention in your HMO properties and boost your profits!

Why Is Tenant Satisfaction & Retention So Important?

Many of us aren’t focusing on tenant satisfaction and retention because the costs for not doing this aren’t invisible. We’re not invoiced for it, and it’s not an expense that shows up on our Profit and Loss Statement. But it’s an area that can have a big impact on our HMO businesses!

While we haven’t had to work particularly hard to keep tenants or fill rooms over the past couple of years, it will not always be that way. And tenant satisfaction is often a key factor in determining whether a tenant will renew a contract or stay past their initial six months.

Additionally, if you can sustain good tenant retention, you’ll earn a steadier income. On the other hand, if you don’t and your income is up and down when you’re coming up to a refinance, the bank won’t like that.

Good tenant retention can also reduce maintenance costs. Tenants coming in and out costs money. Not because they’re banging the walls when they’re moving in and out of the house but because there’s often less accountability. Tenants who stay longer typically take more ownership if they’ve done any damage to the property or furniture.

And ultimately, it can cost you time and money to find new tenants. It’s not only about saving money on the voids and marketing costs, there’s extra paperwork if you have a high churn rate among tenants, and you have to do more viewings and prepare the adverts.

Improving your tenant satisfaction and retention can really have a big impact on your HMO business. So, here are a few things you can do to help improve tenant satisfaction and retention across your HMO properties!

1. Create a welcoming environment for new tenants.

Moving can be hard, especially when moving into a house with four or five other people who already know each other well. So, the more welcoming and comforting you can make that experience, the easier it will be for your tenant to settle in. And if you do that well, that can really help you retain tenants for longer.

It’s also helpful to find ways that promote community and cohesion amongst your tenants. This could be through regular social events or by creating inviting shared spaces. And you need to create an inclusive environment for all of your tenants. Think about communal spaces, rooms, and amenities – the sorts of things that contribute to a comfortable living environment.

But you also need to think about communication and the setting of house rules that create a harmonious environment. You could implement a community board with helpful information laid out. All of these sorts of things can help new tenants feel more comfortable and confident when moving in and getting settled!

2. Find ways to improve your professionalism and communication.

Nowadays tenants expect communication on demand, so be prepared to manage this and be more nurturing and reassuring when tenants move in. We can all really be doing more when it comes to communication and professionalism. Being poor at this can significantly impact your tenants’ experience.

Set yourself expectations as a business. What does clear and effective communication look like? Think about your response times and regularity of updates. How quickly are you going to be able to respond to tenants? Be realistic, and write this all down on paper.

It can be beneficial to become more proactive with what you communicate to tenants, such as if there’s going to be a planned broadband outage. And be transparent with your tenants about things that need to be done on the house, any issues that you’ve had previously, or things that might influence or impact their tenancy agreement.

You also need to think about how you will handle disputes and complaints with tenants and communicate that process to them. Even if you own just one HMO, you still need to have a complaints procedure in place. It gives tenants reassurance that there’s a process if they’re not happy or feel something needs to change.

As the private rented sector becomes more and more commercialised, this will become increasingly important. If you’re self-managing, you should see yourself as competing with managing agents who are trying to provide a better service. So, if you don’t have great communication and professionalism, you could get left behind!

3. Stay on top of regular maintenance and improvements.

Tenants want regular updates on maintenance and for repair work to be dealt with quickly. And it’s also crucial to set the right expectations with your tenants before they even move in. Make sure that they know what to expect in terms of maintenance timelines.

Sometimes we don’t update tenants at all after they’ve raised an issue. The next time they hear from you may be when you’re arranging notification of access. But that might take two or three weeks depending on the repair. And during that time, tenants will be getting frustrated!

Put yourself in your tenants’ shoes. Often, they just think we’re ignoring them or we’re not prioritising it. And often that isn’t the case. Certain work will take a longer period of time to sort out. We can’t always get tradespeople there quickly because they’re busy, we have to order materials, or more investigation needs to be done.

But no matter what, make sure that you manage this process and that you effectively manage tenants’ expectations too! It’s also key to prioritise your inspection process. This can help you be proactive and reduce how often tenants are having to report things themselves.

Another thing is that landlords often put the blame on their tradespeople. If you have a tradesperson that takes ages, isn’t reliable, or doesn’t go in when you’ve arranged, that’s really frustrating for our tenants. And this is our responsibility to fix, so you’ll have to find someone else who is trustworthy and won’t mess our tenants around.

On top of that, you need to continuously improve and upkeep your HMO properties. How often do you touch up decorating and update the artwork that’s looking a little dated? Do the sofas, coffee tables, and other furniture need to be replaced? It’s important to continue to reinvest into your HMOs, keeping the environment fresh for our tenants.

4. Consider new services that you could add on.

The concept of value add isn’t new to many different business sectors, but it’s not so commonly used in the private rented sector. As a HMO landlord, examples of value-add services can include:

Upgrading the WiFi with a faster download speed
Stepping up cleaning services
Organising social events like pizza nights
Offering laundry services

It’s all about providing a better product or service and creating a community and bonding experiences for tenants where you can. What you should offer depends on what type of HMOs you operate, but if you own professional HMOs, particularly higher-end properties, it’s definitely worth considering these kinds of services you could add on!

5. Improve how you handle tenant turnovers.

There are best practices to follow in order to achieve smooth tenant turnovers. It’s incredibly important to get your tenant turnover process just right so that if you do have to change a room over, you are doing it as cheaply, cost effectively, and time effectively as possible.

For starters, you need clear checkout processes, and you need to know what you’re doing when it comes to returning deposits and dealing with property damage. This all has to be planned in advance of anyone moving out.

How and when you prepare your adverts to reduce any down time is also crucial. But of course, you have to balance that with doing viewings of the room, and that also includes setting the right expectations with your tenants.

And here’s a cheeky tip, incentivise your tenant leaving and any of your other tenants to find a good replacement – maybe a friend or work colleague. If you do this, it could not only save you time and money, but this could also help you continue to build a cohesive environment of tenants who get on well and want to stay!

So, those are five solutions that will help you optimise tenant satisfaction and retention. Keep in mind that simple things and small gestures can go a long way with tenants. If you’ve been distracted by the many other things going on, hopefully you can now refocus on some of the basics and key things that you could be implementing into your HMO business!

If you want a shortcut to some of this, there are a lot of documents, resources, and helpful advice within The HMO Roadmap. To gain access to useful document templates, including a tenant welcome pack and maintenance schedules, sign up for the premium membership today!

About the Author:

Andy Graham is the founder and the lead trainer at The HMO Roadmap! He is also the co-founder of The HMO Mastermind, writes as a regular columnist in different magazines about a variety of HMO topics and is the host of The HMO Podcast! Follow Andy on Instagram!