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The HMO Investor Opportunity

Houses of Multiple Occupation or HMO’s are simply residential properties (normally having a class C3 use) that are reorganised internally to provide a number of bedrooms that can be let on an individual basis, each lessee will have their own tenancy agreement.

Some bedrooms may include en-suite facilities whilst other will have shared bath/shower room facilities.

Category A HMO’s are generally defined as bedsits where occupants are typically unknown to each other and have individual tenancy agreements and more often there are no communal facilities. Category B HMO’s are generally occupied by a group of friends who share amenities such as a kitchen and lounge, and will often dine and socialise together within the household. These occupants will typically have a single tenancy agreement for the rental of the property as a whole.

 

More recently there has been a lean towards a Category A and B hybrid arrangement where bedrooms are let on individual tenancy agreements, though common living space, kitchen and dining area are also provided. Tenants often consider this a more desirable arrangement, as it not only increases the home space, it also provides for separate dining and an opportunity to interact with housemates.

 

HMO’s offer an exciting return on investment with more and more property investors recognising the true potential. Oxford City requires all HMO’s to be licensed and planning permission must be obtained in order to open a HMO. In recent months Oxford City Council has introduced new regulations governing the number of HMO properties, and there are reports that some existing HMO properties have not had licenses renewed. Of course there will always be a pressing need for this type of accommodation to satisfy the huge student demand as well as those employed in the city.

 

Oxford’s surrounding towns however are very much still an untapped opportunity for HMO’s, particularly in that a 6 occupant HMO will not usually require planning consent or licensing within many local authorities. The combined rental income for six bedrooms will typically return in the region of three times the rental income for a three/four bedroom straight let property. The improvements to the local rail network are also encouraging people studying and working in the city to seek more affordable accommodation outside of the city.

 

Demand for affordable accommodation in Oxfordshire’s towns and villages (and surrounding counties) is at an all time high, particularly as house prices continue to soar. Rooms that become available are typically let the same day!

 

The refurbishment costs are relatively low where careful consideration has been given to sourcing a property of a size and configuration that makes it suitable for the conversion to HMO.

 

We have designed a number of HMO properties in the Oxfordshire area and have a wealth of expertise with regard to what type of properties are suited to HMO refurbishment, the governing regulations and planning constraints, and we can offer general guidance on the setup and implementation.

Check out this link and press the play button to view an Oxford HMO completed June 2017.

We would welcome your enquiries and would be delighted to assist with both new and existing property.