The HMO market is constantly changing and increasingly competitive. At the same time, city demand for good HMO rooms is increasing. In this article, we consult regional experts to find out what it takes to succeed as a specialist HMO agent in Manchester.
Why Manchester for HMO investment?
Manchester has become a prominent location for residential property investors as the population grows and the economy remains strong.
What’s more, it is offers wide appeal for young professionals, many of whom make Manchester their home after graduating. Over fifty per cent of Manchester’s students begin their careers here after leaving university. And with employment increasing at its highest levels since records began, Manchester provides an excellent opportunity for young professionals to work, live and socialise in the city.
“Manchester is thriving city,” explains Peter Baker of ‘UK Rooms for Rent’. Thousands of people come to live here every year. “According to recent figures produced by the electoral office, in the past year alone, over 10,000 people left the Greater London boroughs to relocate to Manchester.”
Peter envisages these relocations continuing. The city skyline demonstrates massive investment and regeneration in the city in both commercial and residential developments. Global finance, insurance and technology companies are moving to Manchester and these opportunities assure the city’s economy and its inhabitants’ prosperity for the foreseeable future.
Investors are planning to take advantage of the high rates of capital growth and rental yields offered by investing in property in Manchester.
Meanwhile, new residents report enjoying the city’s vibe. Those who yearn for the outdoors find their recreation in the Peak District which is only 30 minutes away by train or car.
Manchester offers the affordability and convenience renters are seeking.
Compared with the cost of a one-bedroom apartment in the city centre starting at £700 per month (plus bills amounting to an extra £400.00), HMOs offer a more economical solution.
“Renters can expect to pay an average of £455.00 per calendar month for a double en-suite room, fully inclusive of all bills,” explains Peter.
“The HMO market shows no sign of slowing with many more landlords favouring this investment model. Even with the planning restrictions (change of use from C3 to C4) brought about by the Article 4 directive, HMO properties are opening up for rent in the surrounding boroughs of Salford, Ashton-under-Lyme, Bury and Stockport.
The change in law in October 2018 saw many more licensed HMOs enter the market as the definition of a house of multiple occupation changed. Despite the increasing number of HMOs on the market in the Salford postcodes M5, M6 and M7, demand remains outstanding.”
Demand for HMOs
“Over the last 14 years I have personally witnessed a sharp rise in the rental prices for single let properties across the city, forcing renters towards a co-living solution,” says Peter.
The HMO market is equally strong in the student and professional sectors with the universities, the airport, and major financial and technology companies setting up in the city.
The HMO market shows the co-living model being set to increase in popularity both as a means of investment for landlords and a choice of lifestyle for tenants.
Compared to single let houses, landlords benefit from higher rental income from an HMO while tenants can afford a high-quality place to live which better suits their pocket. In choosing HMO living, one of the benefits is the ability to save for a cash deposit towards buying their first home.
Investors are wise to consider their responsibilities before buying and managing an HMO. Managing an HMO is more labour intensive than a single-let house. Landlords need knowledge of the law and regulations around HMOs in order to remain compliant. See our article ‘How to run your HMO in compliance with laws and licensing” for more details.
The difference between managing an HMO and a single let
Providing co-living in a house of multiple occupation does not end with giving a key to the room. Landlords cannot let and forget.
It’s essential to take care in selecting the right people to live there compatibly. It will reduce turnover of tenants and keep voids to a minimum.
Student and young professional tenants often need support in settling into their new home and the most successful landlords stay in regular conversation with their tenants to make sure they are happy there. Every property has its fine distinctions. People are unique, each with their own demands and needs. Yet the benefits are considerable and the best landlords and agents provide the ideal co-living experience for their tenants.
“The main difference in renting out HMO properties is in the advertising,” advises Peter. “It takes time to get to know prospective tenants to make sure they are well-suited to their new home and will live in harmony with the existing tenants.”
Want to outsource? What to look for in an HMO agent
Local experts Peter Baker of UK Rooms for Rent and Tracy Wardle of Abode Property Management recommend landlords consider carefully when choosing a specialist Manchester HMO management company.
Landlords benefit most when their HMO agents are highly experienced in the property industry and possess in-depth local knowledge.
For example, Peter has first-hand experience in property sales, probates, repossessions, auctions, mortgages property management and HMOs.
Abode has a team of experts who keep up to date with all HMO legislation, working in partnership with local councils to make sure the properties they manage remain compliant. They help landlord through legal processes and regulations such as obtaining an HMO license.
Tracy explains: “We believe our job is not to just manage the properties, but to educate our landlords and investors about helping them to make better investment choices. We know our area very well and blog about different areas in which to invest, types of tenants to expect, locations to choose and returns to expect.”
The importance of an HMO community
The importance of lifestyle and the way a home contributes positively to the mental and physical health and wellbeing of an HMO tenant cannot be overstated.
As Tracy explains: “We look after our tenants, dealing with a multitude of issues and challenges, to help them settle in and feel at home.
“We interview every prospective tenant with the aim of matching them with existing housemates. As a result, we (and the tenants) enjoy a great relationship with the neighbours in each property. We are accessible to tenants and landlords whenever they have a question to ask. Our managers visit properties weekly and are regarded as community managers.”
Peter echoes this ethos: “During the last couple of weeks we have been moving students into their new houses and to our delight, most neighbours are engaging and keen to get acquainted with the new occupants.
“We foster good relationships with residents in our houses. They know they can come to us if they have any worries or concerns. It is a great asset to have accountability in the community from day 1. The local city council’s Selective Licensing initiatives are an important aspect to co-living in diverse communities throughout the region and lays out standards and expectations from the outset.”
Tenants always appreciate same day responses. And today’s young people are concerned about the environment, preferring, for example, green energy in their shared house.
The relationship with an HMO tenant begins as soon as an enquiry is received. The work taken to foster a good relationship with tenants benefits everyone.
Accomplished HMO specialists in Manchester
UK Rooms for Rent
UK Rooms for Rent have managed HMO properties since 2013, formerly managing single let property. Their lettings team will expand to 11 staff in September. After converting some of his own properties into HMOs, several of the director’s landlords followed suit. He had come to fully understand the model and financial benefits and the business organically escalated from there. They’re proud to be regarded as a “Go To” company for HMO management solutions.
Abode Property Management
Abode were led towards HMOs thanks to market demands and good relationships with their landlords. Currently handling 120 rooms across Manchester, the company is fully regulated, ARLA qualified, members of a client money protection scheme and the industry ombudsman. They appreciate being admired for their people, customer service and professionalism. “We believe our job is not to just manage the properties, but to educate our landlords and investors about helping them to make better investment choices.”
Our thanks go to Peter Baker and Tracy Wardle of their respective companies for contributing to this article:
- Abode Property Management at 23-26 Cartwright Street, Hyde, SK14 4EH, https://www.abodeltd.co.uk/
- UK Rooms for Rent at Barclay House, Chester Road, M16 9EA, http://www.ukroomsforrent.co.uk/