How Covid-19 has affected the HMO market

What has lockdown meant for most HMO landlords across the UK? Will HMOs be a thing of

the past?

As an HMO landlord myself I can’t deny that lockdown has affected my business, but I do

see a light at the end of the tunnel and have continued to grow my portfolio through the

pandemic.

Challenges faced through lockdown:

Non-payment of Rent

Initially this was a huge concern for all landlords as there was the fear of people losing their

jobs or employees being furloughed. However, UK’s economy had a huge amount of support

from the government through the Coronavirus Job Retention Scheme where workers were

paid 80% of their salary for hours not worked. This scheme helped put money back into

tenant’s pockets and as a result majority of landlords weren’t affected by tenants not paying

rent.

Filling Voids

This is one of the more pressing issues UK HMO landlords are facing at the moment. A void

HMO can quickly turn your asset into a liability where you are forced to continue to pay

monthly overhead costs that buy-to-let landlords wouldn’t have to worry about.

Why has demand faded?

HMO accommodation is quick and convenient to move into but is usually used by its tenants

as a temporary bridge for future plans. Students may rent HMOs for the social aspect, but as

soon as studies have completed, they will move on with their lives. Young professionals may

move into HMO’s temporarily whilst they find their dream home or settle into a new job at a

new location. Seasonal workers will rent out HMOs whilst they have work.

My point being is that HMO accommodation always will be temporary for most people,

tenants don’t intend to live in HMO’s all their lives. Generally, HMO tenancies range from 3

to 12 months long.

What has lockdown done? Its kept everyone in one place. There’s no moving around, which

has temporarily killed demand. Students haven’t physically been going to university,

overseas seasonal workers can’t get into the country, young professionals aren’t expected to

go into work every day and can work from afar.

What can we do in the meantime?

Treat your current tenants like royalty so they don’t want to leave.

Not as though we shouldn’t be doing this in the first instance, but I know some

landlords who aren’t so responsive to their tenants needs or who procrastinate

repairs. If you are a landlord who does this, id cut it out of your habitual

routine and start treating your tenants like royalty. Ask them if they are okay

and if there is anything they need in the house; maybe get someone to clean

the house once a while. It all pays off in the long run.

Rent your HMO as a single let

If you are really struggling to fill your rooms and have monthly bills to your

ears, I would look into the possibility of temporarily renting your HMO as a

single let on an Assured Shorthold Tenancy (AST). You won’t receive the

massive monthly income you are normally used to but at least it won’t be

costing you any money.

What does the future hold for HMO’s?

As I previously mentioned, I have been growing my HMO portfolio through the pandemic.

Why would I do that? Because, I am well confident that once the economy starts moving

again, which I believe is just around the corner, demand for HMO’s will rise again. However,

this is just my opinion but I can tell you it’s of the same as a lot of HMO property managers

and HMO landlords out there.