As we approach a new year, it probably seemed like the only certainty to come out of 2020 was uncertainty.
Yet the property market has continued to outperform even the most positive of predictions, despite everything Brexit and the coronavirus pandemic have thrown at it.
Included within that high-performing property market are Houses in Multiple Occupation (HMOs) – the properties that our Franchise Partners create for working people.
Shared living has arguably never been more popular, yet we’re often asked here at Platinum how we expect HMOs to perform in times of economic uncertainty.
To answer that question, let’s look at some statistics:
- England’s population rose by 358,000 in 2018 and 361,000 in 2019, according to the Office for National Statistics (ONS)
- The average house price-to-income ratio in the UK is now 8.35 – that means a buyer would need 8.35 times their salary to buy a property, according to YBS
- According to Spareroom, 31% of adults living in shared accommodation in the UK could afford to rent a property on their own and only 12% could afford to buy
But while those figures show without doubt that many adults rent rooms in HMOs because that’s what they can afford, in more and more cases, it’s becoming a lifestyle choice.
The social factor
Often, our Franchise Partners find they are letting their rooms to people who are new to the area.
That could be because they simply want to live in a new place, or, more often than not, they’re moving because of work.
HMOs are a great option for those people, because not only are they moving into a great property, they’re moving into a ready-made social life, too.
The affordability factor
A room in a HMO costs less than renting a one-bedroom flat ¬– it’s that simple.
At a time when renters are tightening their purse strings thanks to all the uncertainty we mentioned at the start of this piece, HMO rooms are becoming more of an option simply because of the money renting one saves.
The convenience factor
You only have to look at the popularity of on-demand TV and music, food delivery boxes and car leasing to know that the UK is moving towards more of a subscription culture.
It’s the same with living accommodation – HMO rooms mean renters have everything they need before they move in, from furniture and white goods, to all their bills and broadband included in their rent.
The flexibility factor
The idea of a lifelong job, marriage and 2.4 children is an age-old notion that simply hasn’t stood the test of time.
We live in a society that is more flexible than ever before and renting a HMO room provides renters with the flexibility they crave.
The WFH factor
Working from home has become so common, spurred on by the pandemic, that it now even has its own acronym.
But while people renting standard buy-to-lets or those who own their homes may have been forced to kit out home offices, our Franchise Partners’ HMO housemates were ahead of the game.
When they move into their rooms, they’re greeted with a desk and fully-equipped WFH area, as well as superfast broadband.
The ‘cared for’ factor
Platinum Franchise Partners have many reasons for creating their HMO property businesses.
They generate healthy incomes.
They get back their time and often are able to give up their jobs.
They build a legacy to pass on to their children.
But one of the main reasons they do what they do is so they can provide great homes for great people.
And the reason their rooms are always full is because not only do they provide that great accommodation, they look after their housemates and go above and beyond to make sure they enjoy living in their HMOs.
Take Simon and Kelly Merry, for instance, who run Kelsy Living in Warwickshire.
Every Halloween, Christmas and Easter, they drop off gifts and treats for the housemates in their two HMOs.
But what about HMOs in a recession?
We hear you.
Recessions, like the one we’re in now thanks to the coronavirus pandemic, can affect every facet of our lives – including where and how we live.
But we’ve been through two major recessions here at Platinum, one in 2008-09 and another one now, and our Franchise Partners’ HMOs are still well occupied, earning great incomes and providing safe, comfortable homes for thousands of people.
Why?
Well, in part it’s because the commitment of buying a home in a recession is a pretty scary thought for many people.
So, renting is usually their chosen option – and the stats back up that idea, too:
- Rental demand sparked by the Covid-19 pandemic has seen average rents in the UK soar to £964 per month – a record figure outside of London
- RICS reported, in October, that 21% of lettings agents were reporting a continued increase in tenant demand
There’s still a shortage of housing
The UK needs to build 340,000 homes a year until 2031 in order to overcome a chronic lack of housing.
Between 1959 and 1988, 7.4million homes were built in England but the next 30 years saw just 3.3million built.
That equates to a shortfall of 104,000 homes every year for 30 years.
The demand for affordable accommodation is there, but with building not keeping pace, HMOs are helping to pick up that shortfall.
Find out more
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