What Are Social Housing HMOs? (House In Multiple Occupation)

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• published: 30 Jan 2017
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For more information about our HMOs see: http://propertyinvestmentsuk.co.uk/invest-social-housing-hmo-property-investment-deals/ https://www.facebook.com/PropertyInvestmentsUk/ More about HMOs from our blog http://propertyinvestmentsuk.co.uk/category/houses-in-multiple-occupation/ -- What Is An HMO? HMO stands for House In Multiple Occupation. Most commonly an HMO is a property where individual tenants are each renting out their own bedroom and sharing communal facilities. So an HMO is a property with multiple tenants who share some communal spaces. These might include a lounge, or a kitchen, or bathrooms; it depends entirely on the layout of the house. -- What Is A Social Housing HMO? A social housing HMO is an HMO that is run with a particular tenant profile in mind; social housing tenants. How this typically works is the property owner will rent the HMO out to an individual, or more usually a company/organisation, who will, in turn, let it out to tenants. -- A Typical Rental Term What we usually look for in a social housing HMO project is to lease the property to a company, a charity or a housing association for a period of three to five years. -- Social Housing HMOs - The Tenant Profile Tenants in social housing HMOs tend to be people who require some kind of on-going support from organisations or support workers. They could be people with mental or physical disabilities. They could be people who are seeking asylum. Most likely these types of tenants will not be in full-time employment or in education. -- Demand and Location The organisations that rent social housing HMOs are typically housing associations, charities and occasionally for-profit private companies. Each organisation will have different requirements determined mostly by the needs of their tenants and service users. As such the demand for social housing HMOs is very location specific. There needs to be an organisation operating in the local area that requires these types of properties. In turn organisations such as this will be drawn to an area that has a requirement for them to be there. Social housing HMOs are not needed everywhere and, as such, this investment strategy will not work in every location. But, in the right location, the rental yields for this kind of property are fantastic and there are many other benefits to this kind of investment as well. -- Social Housing HMOs - A Hands Off Investment What you will typically find with this kind of property is that once you have a lease in place with an organisation, your work is pretty much done. They will manage their tenants and take charge of making sure that the house is occupied. Zero Void Periods, Zero Arrears They will also underwrite the rent which means that you get paid regardless of what happens. If the end tenant can't pay the rent, or if the house is under occupied, then you, the property owner will still receive what's owed to you under the terms of the lease. So with this property, investment strategy there are zero void periods and zero arrears and it is because of this that we have found that, for rental return, social housing HMOs out-perform all of the other property investment strategies that we currently deal in. -- Maintenance With social housing HMOs, once a lease is in place, the property owner doesn't need to worry about tenant management and their rental income is assured. Often you will also find that a certain amount of maintenance will also be covered. It depends on the organisation and the terms of the lease but a lot of companies will cover maintenance costs up to a certain amount per year or a certain value per item. -- Putting It All Together We have found investing in social housing HMOs to be fantastic. The guarantees on rent, management and maintenance have meant that we know exactly how much we will be receiving over a given time period. This means we have been able to really narrow down on cash flow and the need for a contingency budget is less pressing. Also, these types of properties are very hands off. They are pretty much set and forget. You negotiate a lease and then that can be pretty much it. -- Our Social Housing HMO Deals Although we only feature one social housing HMO deal on this page we have a number of different properties currently available. These properties are already refurbished and tenanted, with a lease already in place with a social housing provider. They are all ready to go and income generating. For more information simply get in touch - give us a call, or drop us an email - and we can show you what we have available and talk through whether this property investment strategy is going to be right for you.