A recent survey by Landbay reveals that half of HMO (House in Multiple Occupation) landlords rely solely on their property portfolios for income. This reliance underscores the significance of rental income in the lives of many landlords in this sector.
Key Findings from the Survey
The survey showed that nearly 30% of participating landlords own HMO properties, with 72% of these owning them through a limited company. A significant 50% of these landlords stated that their property portfolios are their only source of income, highlighting the importance of rental revenue in their financial stability.
Despite the complexities involved in managing HMOs, the survey found that almost half of these properties are self-managed. Notably, a third of these self-managing landlords own portfolios exceeding 20 properties. This trend towards self-management might be influenced by the fact that the most common portfolio size is relatively small, with 34% of landlords owning between four and 10 properties.
Regional Distribution and Market Resilience
The survey identified that the highest concentration of HMOs is in London and the South East, accounting for 47% of the total, followed by the East Midlands. This regional distribution points to a strong demand for shared housing in these areas.
A spokesperson for Landbay commented on the survey’s insights, stating, “Our survey results show continuing confidence in HMOs. Despite proposed rental reforms and local authority licensing schemes, the market remains resilient. With an ongoing housing shortage, demand is stronger than ever for decent and fairly managed house shares.”
Economic Factors and Market Outlook
HMO landlords have recently benefited from falling utility bills, which increase net rental income and make borrowing against property values easier. Additionally, the reversal of council tax banding for individual rooms in shared houses has reclassified HMOs as single dwellings, further aiding landlords.
The Landbay spokesperson added, “HMO landlords have received a boost from falling utility bills. This means higher net rental which can make it easier to borrow a greater amount against the property’s value. In addition, council tax banding for individual rooms in shared houses has been reversed so HMOs are classed as a single dwelling as before.”
Despite the challenges, there is optimism in the sector. The spokesperson concluded, “As long as investors do their research thoroughly before making the leap, HMOs can give great returns.”