Photo by J.O. Property
Have your HMO properties remained in high demand and are room rents continuing to go up on average in your local area? Or are you interested in starting to invest in HMOs because you’ve heard about how well the sector has been performing? Overall, it seems good quality housing stock across the HMO market continues to be in really high demand!
In this blog post, we’ll cover what’s impacting supply and demand, and rents across the HMO market, in addition to how to effectively keep your property in demand moving forward!
Record-breaking room rents
New data from flatshare site SpareRoom showed room rents once again reached an all-time high in Q4 2022 as the average UK room rent increased 13% year-on-year.
Demand for properties reached an all-time high in late summer and early autumn, while supply was at a nine-year low. To put this further into context, there were 245,351 renters searching for rooms, while only 34,085 rooms were available.
Things have calmed down slightly since then, but demand continues to outweigh supply as the number of rooms available decreased across 2022. A recent poll from SpareRoom also revealed that there could be a further decline in the supply of rooms for rent moving forward. This could put additional upward pressure on rents.
Matt Hutchinson, director of SpareRoom, commented: “Although demand has eased since the record peaks we saw in August and September, the combined effect of low supply and the cost-of-living crisis means rents have continued to rise. The last 12 months have seen rents across the UK hit record highs and, unless new supply comes into the market over the coming months, it’s hard to see those rents come down meaningfully in 2023.”
“High rents not only make it difficult for tenants who need to move now, it also means that many stay put to avoid paying more rent… Work is the key reason people move, but if a potential pay rise is wiped out by having to pay more rent, lots of people will simply stay where they are.”
Regions seeing the biggest rise in rents
The recently released figures revealed that the average cost to rent a room in Greater London surpassed £900 per month for the first time ever in September 2022, and it has continued to increase with the average rent in December 2022 hitting £949 per month.
Comparing Q4 2022 with Q4 2021, London had the biggest increase in room rents across all UK regions with a 22% rise. Every region recorded an increase except Scotland. And Wales, the North East, North West, Northern Ireland, South East, and East Anglia saw strong growth in room rent increases, ranging from 15% to 18%.
It’s important to understand what demand and room rents are like in your investment area. It can be particularly helpful to take the time to become a local expert, so you understand the ins and outs of how the HMO market is performing and when anything changes in your area!
How Can You Keep Your HMO Properties In-Demand?
While demand and rents remain strong, it’s still important to ensure you keep your HMO properties in demand. Here are some of my top tips to help you do exactly that!
1. Provide good value and quality, modern properties.
For starters, your HMOs need to be high-quality and well-designed. It’s important to provide not only good value but also what modern tenants are looking for. Your properties need to be up to standard and offer everything your target tenants are looking for.
2. Keep up with what’s most in demand moving forward.
Make sure you keep up with what features and amenities are most in-demand among your tenants, and keep in mind that this may change over time. Consider if there are updates you need to make to your property, and prioritise energy efficient improvements as this is a top priority for tenants across the board.
3. Improve your strategy for filling HMO rooms.
Get the averts right for your rooms, always reply to enquiries quickly, and implement the right systems and processes to fill your HMOs. This can help ensure you are being as efficient and successful as possible with your strategy for filling rooms.
4. Find ways to keep your tenants for longer.
Increasing the average length of your tenancies and reducing the rate of churn can help keep your properties more in demand. This can be done by having a great tenant matching process, being proactive with tenant renewals, prioritising community specifications, taking care of maintenance quickly, and dealing with problematic tenants swiftly.
The future of the HMO market continues to look bright, but you still need to do your research and due diligence. And while there are challenges we’re all facing, there could actually be more opportunities across the sector in the coming years!
If you’d like to discuss more details about the HMO market, join our free Facebook Group The HMO Community. And for more useful insights on how to start, scale, and systemise your property portfolio, 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!