Photo by Wilson Finch Properties
Some businesses are increasingly keen to get professionals back in the office more regularly following a rise in remote working since the onset of the pandemic. At the same time, rental demand has been strong in the professional HMO market, especially in city centre locations.
In this blog post, we’ll cover what’s currently impacting the professional HMO sector, what considerations should be made, and tips for investors within the industry!
Young People Are Continuing to Rent for Longer
Demand for co-living rental properties is hitting all-time records, particularly in certain locations. As the cost of living continues to impact everyone’s pockets, young people are being priced out of buying with high house prices and mortgage rates.
This means many are struggling to get their foot on the property ladder, especially in more expensive locations. And we could see a rise in more young people having to put off any home-buying plans.
A recent report from the Guardian revealed more young people are being forced to rent for longer periods of time and that the average age of a first-time buyer increased to 34 in 2021-2022.
As wages continue to stagnate and inflation remains high, this could mean that more young professionals will be looking for house shares and HMOs for longer, particularly as it’s a more affordable form of accommodation! Because of this, demand is expected to continue to outstrip supply, particularly in these sectors.
Considerations to Make in This Sector
When it comes to investing in the professional HMO market, these properties are significantly more challenging to manage, particularly when compared to student HMO properties. So, this is something you need to be aware of and prepared for!
For starters, professionals often have higher expectations. Because of this, it’s important that you provide a high-quality property and a strong property management service. But keep in mind that this isn’t easy to do. You’ll end up spending additional time managing relationships and taking care of paperwork and admin.
On top of that, as this tenant demographic is more transient, this can make it more challenging to maintain higher occupancy in your properties. And professional tenants in a HMO will be on different tenancy agreements, so you face the risk of more void periods. And this is something you need to effectively factor into your deal analysis.
It’s important to be aware of everything involved in owning a property in the professional HMO sector to ensure you’re prepared for the challenges that come with it. But on the other hand, these HMOs can really provide opportunities to earn strong rental yields!
3 Tips for Investors in the Professional HMO Market
To keep your HMOs in high demand moving forward, there will be a few things you need to do to ensure your property portfolio remains successful and sustainable. Here are some of my top tips for professional HMO investors!
1. Improve Your Property & Tenant Management Strategy
Having a strong property and tenant management strategy can help you provide a better service to your tenants, and this can help make them want to stay in your properties for longer. There’s probably always something we can improve on!
This is particularly important during the cost-of-living crisis as many tenants are currently facing the difficult decision of whether to stay put or move on, depending on where the best deal is. And having a good tenant-landlord relationship can influence their rental decision-making.
2. Keep Up with What Modern Tenants Want
Tenant demands are often evolving, and modern professional tenants are increasingly expecting more from their rental properties. So it’s important to be aware of the current market and understand how to produce well-designed, high-quality homes that will catch your target tenant’s eye. Effectively doing this can help you better ‘future proof’ your HMO properties as well!
3. Look at Your Systems & Processes
As professional HMOs are harder to run and operate, it can be helpful to take a look at your systems and processes and find ways you could drive efficiency in your HMO portfolio. This can also ensure you keep up with all of your legal obligations and changing legislation and make sure nothing falls through the cracks!
The future of the professional HMO market continues to look bright as there’s a big opportunity to create high-quality housing that is in increasing demand. For additional updates and insights on the HMO industry, sign up for The HMO Roadmap 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 and Smart Property, a specialist HMO property investment and management company. He 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!