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  • HMO & Multi-Lets

    City swamped with HMOs - thoughts on options?

    I've run my 'working professionals only' 5 bed HMO for 6 years. Initially it was extremely successful and a room would re-let within a couple of weeks. Of late though it has become more and more difficult. I've currently one room that has been void for 3 months now. I'm just not getting the quality or quantity of interest any more.

    It seems that everyone's got on the HMO bandwagon for the area and we're all after the same poor pickings. If the city's HMO (5-beds or more) register is to be believed, then there has been an additional 181 HMO licences issued since mine 6 years ago! I was number 121. And that's not including the HMOs with less than 5-beds.

    My question, any advice on options?

    I've obviously: compared the competition; expanded advertising; adjusted rates etc. The place is immaculate and with all the facilities.

    My other thoughts have been: add en-suites? convert to 3x self-contained flats? sell up and pull out? All of these I'm reluctant to do lightly for obvious reasons.

    Just wondering if anyone has any other ideas that I haven't thought of.

    TIA

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    Of course, an additional problem will be the many unlicensed HMOs but should be that will have popped up over those 6 years.

    While you have undergone expense to ensure yours meets the qualifying HMO standard, many of your competitors with 5 bedroom won’t have done and thus can afford to run their at lower costs, and lower rents as a result.

    You only have to look at Spareroom.com or Spotahome to see many of these examples. I’m in London and considering going down the HMO route with one Mini-Mo (4 beds) already, but this does put me off a lot.

    Which City are you in out of interest?
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    Roates, please don't do an HMO, there are so so many of them, they are coming out of my ears.

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    Hi David,

    Roates makes a very good point about unlicensed HMOs and I also believe that the Rent to Rent craze is impacting the supply/demand imbalance, along with newbies being advised by property gurus to go straight into HMOs.

    We have some recent related topics:

    Times article on illegal HMOs - Rent to Rent?

    Guardian article on the loss of living rooms 

    Concern over investors being sold HMO dream 

    To answer your question, have you thought about offering a deposit replacement option?  That will assist in making your room the most attractive to tenants.

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    Hi David, which city are you talking about? May I ask yo what standard your HMO are kitted out?

    With the increased returns of HMO there are definitely more and more out there and the new ones are much higher spec so the bar has definitely been raised, and expectations from tenants.
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    Any business in this situation needs to make the decision. Sell-up. Differentiate or reposition. 

    I don’t know your property/market but the first is straightforward. 

    The second: some ideas - install a jacuzzi, include additional services: wine delivery, Netflix, discounted gym passes. Get testimonials from tenants. This will cost you some margin but keep you viable whilst the competition folds.

    The other option is reposition. If you own in cash - shorter tenancies for contract workers, or consider holiday lets? 

    Only you know what might work. Personally I love house shares, but have diversified a little to a couple of flats and now holiday lets - as think there is always saturation potential and I like a plan b.


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    Any business in this situation needs to make the decision. Sell-up. Differentiate or reposition. 

    I think this comment is worth a thread in its own right ... ! Smile

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    I have always had a worry about HMOs

    IMO I think an investor is running a mini hotel and, as we all know, some hotels fall out of favour and close

    Now to the problem if you sell ?? Who do you sell it to?!

    It can only be to another investor who may see the down-turn in the HMO market and will want a good deal to take it off your hands

    I wish you the best of luck ...

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.


    All successful business models come in for a challenge at some point. I think the trick is to be the best...

    TBH I don’t think it’s that hard with hmo’s. There are a lot of crap ones out there!
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    Is there a demand for serviced accomodation for contractors in your area?

    I'm currently doing this in my area rather than HMO.

    We have a lot of development in the area currently and a big demand for either Mon to Fri or whole week lets.

    My 3 storey modem houses are conveniently placed and simply but nicely furnished and room rates range from £90 to £120 per week depending on size and facilities. I generally have people on contracts of at least 5 months, some are on 2 year ones, although if course they rent week to week.

    We clean thoroughly every other week and change bedlinen then too.

    Many of our customers recommend the accommodation to others in their contract so we fill rooms quickly when we have voids.
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