Why Should You Invest In an HMO Property

With over 40 years experience in developing property spanning three generations, The Heaton Group now specialise in the development of premium HMO properties.

The Heaton Group reveals the secrets of why investing in an HMO (home of multiple occupancy) can be a far wiser investment than investing in a traditional buy to let property.

Increased Rental Yield

HMO properties are designed to accommodate a number of individual paying tenants under one roof. Unlike a regular buy to let property, the rooms are classed as singular occupancies, which can be let out to individual paying tenants. For instance, you could receive three rental incomes from an HMO property of £70 a week, which would generate a rental income of £910 a month. However, for an average buy to let residential property, you can only ask for one rental income which all tenants contribute towards, for instance £500 a month.

The opportunity to make a higher rental income from a single property is a priority for developers, as they can offer property investors a chance to make a higher return on their investment. (1)

Spreading the Risk

Not only can an HMO property significantly increase rental income compared to a regular property but they can also provide investors with increased financial security.

If you have one rental income from a typical residential property and the tenants decide to move out on short notice, you may have a number of weeks before you find new tenants. This could leave you severely out of pocket as your whole rental income has gone for this period.

On the other hand, if you have invested in an HMO property, if one of the individual paying tenants decides to move out at short notice, you will still have the remaining tenants rental income to fall back on while you find a new tenant. This sense of security is another reason as to why more property investors are opting to invest in HMOs.

HMO properties allow you to spread the financial risk of your investment to ensure you have a steady rental income from your property

Fair Usage Energy Systems

Making properties desirable to young professionals is one of the best ways of guaranteeing long-term tenancy. Along with high quality and city centre locations, fair usage energy systems allow landlords to offer all bills included tenancies, which are highly appealing to those on a tight budget. (3)

The Heaton Group offers such tenancies on HMO properties. This means that one fixed fee covers both the rent and the utility bills. If tenants spend over the capped allowance, they will be required to pay the difference. The energy allowances are fair and will take into account colder months as well as months where you will naturally spend less on heating.

Moreover, The Heaton Group has incorporated sensors in a number of their HMO properties that will automatically switch lights on or off depending on whether the room is in use. This helps tenants stay under their fair usage allowance, as well as being able to check how much they have used from a smart meter installed in the property.

Increased Demand

HMO’s are in demand due to their high quality, modernisation, locations and living style.

For many young professionals, the thought of living alone is daunting. With most struggling to get a foot on the property ladder, the preferred option is to rent with fellow professionals or friends, rather than live alone. A vast number of university students have lived in an HMO property with their friends during their studies and so the natural transition once graduated is to continue to live together.

The benefits of living in an HMO property outweigh living alone for most graduates, as they can save money, socialise and have the freedom to move out at short notice without any ties to the property.

In addition, the quality of HMO properties provide young professionals with a very modern, high quality living space, often located close to transport links and city centres, which makes them ideal for those commuting to work. (4)

High Quality Developments

With more money being spent on the average HMO, such properties can offer tenants high quality city-centre living with minimal maintenance.

rental return hmo property developers buy let

In addition, investing in a high quality HMO will mean low maintenance cost for an investor. Older properties, which are snapped up, and then rented out almost immediately often require a lot of maintenance and will mean spending more money in the long run. (5)

To gain access to our exclusive investor brochure visit www.heatongroup.co.uk

 

Sources

  1. Rman - HMOs delivering greater return than standard buy to let
  2. Telegraph - Will income from a 750k buy to let empire pay...
  3. Glide - Why more landlords should offer all inclusive rents to students
  4. Property Reporter - Rise in young professionals opting for HMOs
  5. Telegraphy - Phil Spencer property tips

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