HMO stands for House in Multiple Occupation.
The government defines an HMO as a property which has:
- At least three tenants living in the property, from more than one family AND
- Shared toilet, bathroom or kitchen facilities
HMOs are fast becoming the most attractive form of buy-to-let investment. However – they are extremely popular with tenants too. In fact, research shows that there has been a 23% increase in the number of young professionals who prefer fixed rental HMO accommodation instead of renting their own house or flat. (Source: Mistoria Group, 2015)
Recent analysis carried out on behalf of Platinum Property Partners shows that HMOs were by far the best performing asset class over the four-year period from 2010-14.
Steve Bolton, Founder and Chairman of Platinum Property Partners explains:
“Buy-to-let has proven itself to be the top performing investment over the past four years, with returns from bricks and mortar investments outpacing other asset classes like stocks and shares considerably. However, not all types of buy-to-let property offer equal investment return: our research shows that HMO properties let to young professionals and key workers have the potential for substantially higher returns than vanilla or standard buy-to-let properties
Indeed, the relaxation of pension rules in 2014 has allowed people to consider a myriad of options for their hard earned pension pot. Few options have performed as consistently highly as property, with even less returns reaching the heights of HMOs’ potential.
Martin Roche of HMO Property Sourcing Ltd comments: “Our investors enjoy and average ROI of 16% – 20%. With these returns, it’s easy to see why people are looking to invest on HMOs – either as a business or as a pension.”
Unlike tradition buy-to-let properties, HMOs are rarely empty, so there is potential for ongoing income. This makes them extremely popular with professional landlords and investors alike. Statistics published by the Telegraph in early 2015 show that HMO investment returns are consistently and significantly higher than traditional buy-to-let properties.
HMO investment offers the flexibility of passive, armchair investment, or active investment for those who want to be more involved. Find out more by contacting the friendly team at HMO Property Sourcing. We’re here to help!