For investors in 2016, Houses of multiple occupancy, commonly known as HMO’s, are set to become the most popular investment.
Last year, in a survey conducted by Shawbrook Bank, titled “examining the investment expectations of its property investor clients”, only 16% of those asked cited HMO’s as their preferred property type. This year, Shawbrook’s latest survey shows this figure has doubled to a third, overtaking terraced houses, this year’s second most favoured property type at 28%, and flats and apartments at 22%.
This boom in HMO investment comes after what is described as “significant change over the last decade” by Karen Bennett, sales and marketing director of commercial mortgages at Shawbrook. She says, this is due to “very clear tenant and investor profiles emerging to bring some real quality to the sector”. With the rental market currently at an all-time high and demand outstripping properties, investors will be capitalising on this short supply to let out properties room by room, therefore increasing their profits.
HMO’s appeal hugely to an array of applicants looking to rent; namely students and young professionals. Landlords are taking the initiative to let out their properties, near universities, near city centres, or near the transport links into city centres, as HMO’s. Landlords are favouring this way of letting out their property as generally charge more for letting room by room than they do when letting the property as a whole, therefore increase their rental yields.
Also, with the demand for rental property at an all time high, with applicants far out-stripping available stock, this way of letting helps to reduce the housing shortage crisis.