The majority of property investors in the UK have just one or two standard buy-to-let properties rented out to families or couples and have enjoyed exceptional returns over the last couple of decades.
Rapidly rising rents and house prices coupled with record-low interest rates once meant that many landlords, both amateur and professional, benefited from capital growth as well as a supplementary income.
Now, however, thousands of landlords are selling up as the impact of Section 24 and changing legislation starts to bite. Figures released in June by the Ministry of Housing revealed that there was a drop in the number of available private properties to rent for the first time in 18 years.
But wait, you could be sitting on a buy-to-let goldmine!
From underperforming buy-to-let to highly profitable HMO
At Platinum Property Partners (PPP), we get a lot of enquiries from existing landlords who are keen to know more about our highly profitable and specialist buy-to-let investment model which generates up to four times the rental income compared to a single-tenancy buy-to-let.
Investors want to know exactly how our high-quality Houses in Multiple Occupation (HMOs) achieve average figures of £17,000 annual gross profit per property, yields in excess of 11% and 15% return on equity. Some of them are also surprised to discover that one or more of their existing buy-to-let properties could be made to work as an HMO – giving them an excellent head-start in building a successful and professional property business.
Here’s our 5 step quickfire checklist for working out if your property has the HMO potential.
1. Local authority legislation
Is there an Article 4 Direction or selective licensing in place in your local authority? Will your property need planning permission before it can be let as an HMO and will your property be able to comply with mandatory HMO licensing laws which come into force in October 2018?
2. Location
Is there tenant demand in your area for this type of shared accommodation? Is your property within easy reach of local amenities and good transport links?
3. Reconfiguration
Thinking about your property, could you cost-effectively reconfigure the space to accommodate at least five bedrooms, enough bathrooms and large communal area that meet minimum size requirements and standards? Would this require extensions or conversions of an integral garage, for example; are there any restrictive covenants on the property and would you need planning permission?
4. Funding
Do you have the available capital, either in liquid funds or equity in the property, to fund conversion and refurbishment costs? If you have a mortgage, what are the terms and redemption charges? Will you be able to get mortgage for the refurbishment period and an HMO mortgage on the property once converted?
5. Knowledge
Do you have the knowledge and experience to manage a conversion and refurbishment, while complying with local planning, licensing and building regulations and ensuring you finance the project correctly?
Your fast-track to success
If you think your buy-to-let property has the HMO potential but want to maximise your chances of success, then Platinum Property Partners has a tried, tested and proven system you can follow.
Our network of more than 350 Franchise Partners come from a variety of backgrounds with differing levels of property experience; and our team of 50+ property professionals and mentors teach you everything you need to know about HMO development and management.
You’ll no longer need to hold out for long-term capital growth and instead enjoy a significant monthly income and generous profit margin.
Call our team today on 01202 652101 and we’ll help you evaluate whether your buy-to-let portfolio can be cost-effectively converted into highly profitable HMOs or if you can leverage your equity to fund a new property purchase.
In the meantime, download our full HMO property guide – 7 Steps to HMO Success in 2018 here – which begins to show you how you can generate a lifelong annual income of £50,000 – £150,000 from our proven specialist franchise model.
