Anyone who invests in HMOs or who is thinking about doing so will be aware that many local communities across the UK oppose them.
It is a ‘NIMBY’ view that many people, like those who oppose house building in their neighbourhoods, hold and while understandable it is counter-productive.
I get why people oppose HMOs. If you live in a relatively stable and leafy suburb of a city, the arrival of poorer and more itinerant residents (that some but not all HMOs bring) can feel you’re your community being ‘broken up’ and ‘invaded’.
HMO residents are often also blamed for poor street cleanliness, pressures on parking, badly-managed refuse and anti-social behaviour, which are the main reasons which are usually given to oppose planning applications for larger HMOs.
What no-one points out, including many local and national politicians, is that Government policy over the past three decades has cut the provision of social and affordable rented homes to the bone, meaning those living in HMOs often have no other accommodation choice.
HMOs across the UK
HMOs are now evident in any town or city neighbourhood you care to examine and provisional estimates put the number of HMOs in the UK at 500,000.
This makes it a major investment area for landlords and although HMOs require specialist tenant and property management skills including endless patience, plus the fact that regulatory hoops are narrow and high, they offer considerably better returns on investment that traditional buy-to-let properties rented to families or couples.
Research by Octane Capital last year put the average gross return at 8.1% for HMOs compared to 4.4% for ‘regular rental’ properties. This difference can be even larger in areas where rents are relatively high but house prices lower than the UK average, for example in the North East of England.
HMO landlord and tenant relationships
But’s not just about money. HMO landlords I’ve spoken to often feel they help tenants in a way housing officers used to do years ago within the social rented sector, whether it’s helping them budget, live less chaotically and, in one extreme case I heard about, even organise their funerals.
I quizzed one South Coast HMO landlord recently about why one of her tenants were prepared to pay close to the going rate for a ‘regular’ rented one-bedroom flat but instead lived in one of her shared houses.
The answer was that they would not pass referencing for most other types of rented properties and that her HMOs came inclusive of council tax and utility bills.
Also, her tenants knew that, once they’d handed over the cash each week from their wages, the rest was ‘for them’. On a more human level, some HMO landlords often fill the role of parent to many of the single people who live at her properties.
But unfortunately this kind of ‘caring’ approach is not common enough. Too many HMOs are operated by agents and landlords more interested in the higher profits they offer, and less interested in the well-being of the tenants or the quality of the properties or the impact of their HMO on the local community.
It is this approach that has made them the favourite bête-noire of community campaigners worried about the economic decline of their local streets.
If local councils and housing associations were properly financed and good-quality affordable rented homes were available within these areas, then tenants at this end of the housing market would not be blamed for some neighbourhoods’ declines.
HMOs – how do we move forward?
Given that we are years off the social rented sector being properly funded, it would be better if the quality and management of private HMOs were more directly controlled by local authorities so that the perception of their presence within communities improved.
The current ‘restrict HMOs’ approach being adopted by many councils via both additional licencing for smaller HMOs and planning permission restrictions for larger ones, won’t work.
It just kicks the can further down the street. And let’s be honest – HMOs tenants must live somewhere.
It’s about time the key players within the housing market – councils, politicians and landlords – had a grown-up debate about how we house those who cannot afford private rents let alone get on the property ladder, rather than sticking our heads in the sand, which is the current approach.
Nigel Lewis is an award-winning journalist and editor who has covered the property sector for 25 years including work on national newspapers, magazines and online news and features including spells at The Daily Mail as well as Channel 4 and, more recently, leading specialist titles covering property investment, buy-to-let and the agency sector.
