The number of investors choosing HMOs as their preferred property type has doubled in just over six months. In July 2015, 16% of investors favoured HMOs. Now, that figure stands at 34%.
HMOs are winners by a good margin too. Terraced housing is the second most popular type of property for property investors (28%), closely followed by flats and maisonettes, (22%).
42% already have an HMO in their portfolio and a further 46% plan to move into the HMO market.
So why are HMOs the clear favourites for property investors?
The benefits of investing in an HMO are huge:
- Yield – 72% of investors are in the HMO market for this reason
- Capital growth potential – attract 29% of investors to HMOs
- Les chance of rental voids – encouraged 18% of investors
Karen Bennett, Sales & Marketing Director of Commercial Mortgages at Shawbrook told Property Reporter: “As a lender, we’ve certainly seen a surge on interest in HMOs over the past year and our recent broker and client barometers confirm a big appetite in the market. This asset class has undergone significant change over the past decade with some very clear tenant and investor profiles emerging to bring some real quality to the sector.
Whilst the high yields make for an attractive investment, caution must be taken with regard to planning and licensing requirements, along with the challenges and pitfalls of the valuation process. Working with a professional broker is a sound strategy in order to take advantage of the opportunities on offer for borrowers looking to expand into this market, and their knowledge and experience bring a huge amount to the table when trying to achieve a good outcome for the borrower.”
Martin Roche of HMO Property Sourcing commented: “We recognise that there are huge benefits to be gained from HMO investment, yet many investors are not familiar with the valuation process or the legislation involved with HMOs. Our job is to make the process as smooth as possible – from sourcing the potential HMO to securing the property and finding quality tenants once any works have been completed. We aim to offer investors as much peace of mind as possible.”
To find out more about investing in HMOs, contact us – and maybe join our next HMO tour in Stevenage. You can see the world of HMO investment brought to life and our friendly team will be available to answer any queries.