The HMO Blueprint
Savoys Properties give their HMO Blueprint tips on how to adapt your HMO model to succeed 2023 and beyond:
1). En-Suite Rooms
With the impact of Covid-19 wehave seen a big trend in the past 12 months for the increased demand for En-Suite rooms. We noticed for tenant applications that most people that moved into our HMO’s in the past year movedfrom an existing HMO with all sharing facilities to our En-Suite rooms. We manage Non En-Suite rooms for clients, telephone calls for such rooms have slowed and our teams are working 10X harder to findnew tenants for these properties.
In a survey of 1,500 renters carried out by pressure group Generation Rent, one in three renters who live inshared housing felt they could not stay safe in line with government guidance. In shared rented housing, it was nine in 10.
People have been telling us that’s because they’re sharing facilities with multiple housemates, so a kitchen and a bathroom. And it’s very difficult to keep those clean and safe and to practice social distancing.
Therefore we believe if youare creating a new HMO then you should make En-Suite rooms the key blueprint ofyour HMO. In addition if you already have an all sharing facilities HMO then we would suggest you look at increasing the number of bathrooms within the building and if possible introduce En-Suite rooms where possible.
2). Virtual Viewings / Tours
During the past year of on andoff lock downs we had potential tenants that wanted to view properties but wereadvised not to due to Government guidelines. We understood this posed a challenge to many HMO Landlords however wewere fortunate that we invest in 360 degree virtual tours 3 years ago. Virtual Tours alone allowed us to secure 40 deposits during the 3 month lockdown period. In addition when viewings were allowed we noticed people want to do avirtual tour before carrying out a physical viewing.
We at Savoys Properties wouldrecommend to invest in 360 degree virtual tour and professional photos on allproperties not only HMO’s. What we arenow finding is tenants are requesting virtual tours first and if they like whatthey see then they wish to make a physical visit. However we are secured many deposits solelyon the virtual tour. 2023 and beyond Virtual Tours will be part of the HMO Blueprint for success.
We at Savoys Properties arefirm believers that you should embrace technology when running HMO’s and noweven more so as we come out of the lockdown.
Tenants arelikely to be spending more time at home for the foreseeable future therefore wehave upgraded our broadband across all HMO’s. We noticed an increase demand for tenants using Zoom meetings during theday and streaming boxsets in the evening
We havebeen using What’s App for many years however it’s real benefit were highlightedduring the lock down. We had people in HMOs that had never used the wifi complaining about the bandwidth on thegroup. We were able to quickly react and update the speed quickly.
Anotherexample is we had tenants concerned about COVID19 and the cleaning of communalareas. Once communicated with us viawhat’s app we were able to reassure the house by stepping up cleaning thecommunal areas to weekly rather than biweekly.
Just beforethe lockdown we decided to move to Arthur Online which we knew will have manybenefits to the Savoys Properties Team, Our Contractors and Our Tenants. The reason for this we wanted to scale ourbusiness, engage our tenants and have a better understanding. Since moving we have seen the followingbenefits:
· Improvements in Property Management
· Improvements in Task Management
· Better Applicant Viewing & Management
· Improvements in Tenancy Management
· Better Financial Reporting
· Increase in Workflow Management
We believe we will see a moveaway from traditional HMO’s to more a Co-Living properties. What’s the difference between HMO andCo-Living we often get asked.
A traditional HMO tends to be 3 or more unrelated people living in a house which has not been heavily adapted from how the property was originally built. In addition HMO’s could beself-contained bedsit where residents in the household have little interaction.
Co-living is a modern form of creatinga community within a home with unrelated residents. Majority of these Co-Living homes have beenbespoke created or modified to create a well-designed space within awell-managed community. Co-living is nowbecoming popular in cities and towns as a means of affordable living forstudents, workers, or individuals relocating. Unlike traditional properties, co-living isattractive to tenants due to affordability, flexibility, included amenities,and most importantly a sense of community.
In the context of the urbanhousing crisis in the property market, co-living is one of the best and mostdirect means to achieve optimal density, affordable housing, and an urban community in major cities and towns. Intoday’s sharing economy, young people — millennials, especially — have embraced the concept of sharing rides, experiences, and homes. Co-living simply makesthis more accessible and convenient in major cities.
5). Importance of Interior Design for HMO Properties
The pandemic and continuouslockdowns have taught us the importance of functional design of our livingspace, the purpose it serves and its impact on our well-being.
Interior design is more thanjust creating aesthetically pleasing spaces, if done well, it can impact ourmoods and the way we feel. It should uplift us on a bad day and act as atranquil place of refuge away from our busy working lives. Therefore, for HMOsinterior design should be an integral part to consider at the beginning of anybuild process, to better optimise space, offer affordable luxury whilst beingeasy to maintain and contribute to tenant’s stronger sense of well-being.
Interior design will be theenabler to reimagining the perception of HMOs, into one that promotes co-livingand building of inclusive communities, so professional tenants are happy tospend more on rent and prolong their stay.
6). Focus On Cash flow
During the several lockdownsand now coming out it is the ideal opportunity to focus on improving the cashflow of your HMOs. We have taken thepast 12 months to renegotiate the services for our HMOs. We would recommend you to use the upcomingmonths to renegotiate the below to help improve cash flow:
1. Broadband – use price comparisonwebsites like www.uswitch.com, www.moneysupermarket.com, etc to seewhether you are on the best package for price & speed. If not call your existing provider to tellthem your offered a better price elsewhere. In our experience they will do their upmost to keep you.
2. Utilities – wholesale energy priceshave fallen during the lockdown and now is a great time to switch & lock inlower prices.
3. Letting agents are keen to keep hold oftheir landlords and therefore it is worth having the discussion over fees. Otherwise speak to other agents but checktheir reviews online before making the switch.
4. Homecare & boiler plans – there aremany boiler plans now available again can be checked on price comparisonwebsites. Check that you are not overpaying.
5. Buildings Insurance – again if it’sbeen a while since you compared your insurance then speak to other insurancecompanies or brokers. It’s important tonote that HMO buildings insurance is not the same as Buy to Let insurance. HMO is a specialist category and deemed higherrisk than a traditional landlords cover.
7). Property Condition / Maintenance
What we found during thecrisis and the period after, is how important it is to stand out from thecrowd. We have seen more rooms come tothe market due to the increase impact of Covid19 therefore we feel it importantto make each property look different. When looking at majority of adverts in our area for rooms they all lookthe same with magnolia walls with no bedding, cushions etc.
What we would suggest is to bebold with your communal areas, like your hallways, kitchens & lounges. This way once a potential tenant visits yourproperty they will remember yours above property above the other competitors.
8). Letting Agents
How did your agent perform during the past 12 months and how are they performing now?
One of our favourite quote is:
“It is not the strongest of the speciesthat survives, nor the most intelligent that survives. It is the one that ismost adaptable to change.” Darwin
We believe the best agentsadapt to changes in market, adapt their way of work and the way theyperform. We believe where you know youhave a good agent is during a crisis as opposed to a boom. Therefore take this opportunity to judge howthe agent performed and whether you are going to continue your relationship.
9). HMO Opportunities
With the several lockdowns and closure of Universities & increase in online learning; we have seen anincrease in student HMO’s coming to the market. With Universities yet to confirm whether the next academic year will becompletely online we believe more HMOs will come to market and they will be somevery motivated sellers looking to exit the market.
We believe the same will bethe case for tired HMOs where the landlords have not regularly invested inmaintaining the properties. With anincrease in rooms being advertised we will see many landlords looking to exitthe market as empty HMOs don’t make great investments.
There will be opportunitiesfor investors to purchase these HMOs, investment money in bringing them up toscratch and benefiting when the economy bounces back.
As we mentioned earlier we arefirm believers of embracing technology. Technology is key to systemising your HMO business and below are some ofour tips:
a). Customer Relationship Management Software. Invest is software that allows you creditcheck tenants, create check in statements, tenancy agreements and allows to doyour
b). Xero – is a great piece of software forchecking rents and preparing accounts.
c). DocuSign or Signable are great formaking paper ASTs a thing of the past.
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