What Does the Future Hold for HMO Landlords?
Never has there been a better time for acquiring properties especially to let as Houses in Multiple Occupation (HMOs) than now.
I have been in the business for 20 years and last year was good but this year I believe is going to be better.
With the increasing acceptance of long term Rent-to-Rent, Lease Options and Delayed Completions by the owner as a way of disposing of their properties, it is now easier, to obtain properties for little or no money.
This will continue as I expect that the recession will continue throughout 2011 for most of the country outside the South East of England.
Tired landlords and private owners will become increasingly desperate to get rid of their properties and finding selling difficult will become even more accepting of other ways of disposing of their properties.
I predict that Rent-to-Rent, Lease Options and Delayed Completions will become the new 'No Money Down' or 'Property for Nothing'.
Whether a new or an experienced landlord, all you need is the knowledge of how to do Rent-to-Rent, Lease Options and Delayed Completions and you could obtain properties for nothing or very little, which with good management could cashflow for thousands of pounds profit a year providing the property is turned into a HMO.
It gets even better: (i) With the government now stating that 'up to 6 sharers' is now permitted development, it has removed some of the opposition that planners have had against HMOs; but I do not think it has eliminated all the problems that HMO landlords may have with planners.
I cannot see the planners in some areas of the country giving up that easily - we will see! (ii) Every observer concludes that the demand for HMOs is on the increase so there should be a need for more HMOs which, all in all, is good for HMO landlords.
(iii) The proposed change in 2012 of the age from 25 to 35 years old for the shared room rate for tenants on Housing Benefit is fantastic news for HMO landlords as it will increase demand for rooms from a bigger age group.
What is going to be the impact of the changes to Housing Benefit (HB), now also known as Local Housing Allowance (LHA) is hard to assess.
Landlords continue to say that they are pulling out of the HB market - however, they said that when LHA and direct payment were implemented yet the HB departments in my area report an increase in the number of landlords who were housing tenants.
Will the current changes be the straw that breaks the camel's back? I doubt it.
I think along with the reduction in funding for the social sector it will only increase the demand for landlords to house HB tenants but it may reduce their income.
No doubt landlords who continue to house HB tenants will be looking to increase the capacity of their properties so as to retain their current level of income.
I expect them to be: splitting rooms to make two smaller rooms (thereby doubling the amount of HB payable for the same space) converting lofts, garages and cellars into rooms or building extensions to try and achieve the same income or more, or as the planners say, increase housing density.
There will also, I expect, be a significant move from single letting to multi-letting.
As often happens in these situations, it will give landlords the incentive to review the profitability of their portfolio and increase their income by responding to a changing market, however, about Universal Credit.
I have been in the business for 20 years and last year was good but this year I believe is going to be better.
With the increasing acceptance of long term Rent-to-Rent, Lease Options and Delayed Completions by the owner as a way of disposing of their properties, it is now easier, to obtain properties for little or no money.
This will continue as I expect that the recession will continue throughout 2011 for most of the country outside the South East of England.
Tired landlords and private owners will become increasingly desperate to get rid of their properties and finding selling difficult will become even more accepting of other ways of disposing of their properties.
I predict that Rent-to-Rent, Lease Options and Delayed Completions will become the new 'No Money Down' or 'Property for Nothing'.
Whether a new or an experienced landlord, all you need is the knowledge of how to do Rent-to-Rent, Lease Options and Delayed Completions and you could obtain properties for nothing or very little, which with good management could cashflow for thousands of pounds profit a year providing the property is turned into a HMO.
It gets even better: (i) With the government now stating that 'up to 6 sharers' is now permitted development, it has removed some of the opposition that planners have had against HMOs; but I do not think it has eliminated all the problems that HMO landlords may have with planners.
I cannot see the planners in some areas of the country giving up that easily - we will see! (ii) Every observer concludes that the demand for HMOs is on the increase so there should be a need for more HMOs which, all in all, is good for HMO landlords.
(iii) The proposed change in 2012 of the age from 25 to 35 years old for the shared room rate for tenants on Housing Benefit is fantastic news for HMO landlords as it will increase demand for rooms from a bigger age group.
What is going to be the impact of the changes to Housing Benefit (HB), now also known as Local Housing Allowance (LHA) is hard to assess.
Landlords continue to say that they are pulling out of the HB market - however, they said that when LHA and direct payment were implemented yet the HB departments in my area report an increase in the number of landlords who were housing tenants.
Will the current changes be the straw that breaks the camel's back? I doubt it.
I think along with the reduction in funding for the social sector it will only increase the demand for landlords to house HB tenants but it may reduce their income.
No doubt landlords who continue to house HB tenants will be looking to increase the capacity of their properties so as to retain their current level of income.
I expect them to be: splitting rooms to make two smaller rooms (thereby doubling the amount of HB payable for the same space) converting lofts, garages and cellars into rooms or building extensions to try and achieve the same income or more, or as the planners say, increase housing density.
There will also, I expect, be a significant move from single letting to multi-letting.
As often happens in these situations, it will give landlords the incentive to review the profitability of their portfolio and increase their income by responding to a changing market, however, about Universal Credit.
Source...