3 Ways to Maintain Occupancy Levels in your HMO
It’s the confluence of good fortune for those who own HMOs right now – a rising cost of living, high employment, and uncertainty in the economy. Combined, these three factors fuel high occupancy in HMOs and increased demand for rooms. Now is that time. If you also owned your HMO over the last couple of years, you’ll have benefitted from a likely increase in capital value.
Spareroom commented in MArch 2022 that availability was down and as as result room rents had also increased:
“Although rents are up, supply is down 32% across the UK, comparing February 2022 with 2021. London supply is down a whopping 53%, the biggest drop across all UK regions. This means competition for rental properties will be as fierce as ever“.
As ever, it is the cashflow opportunity that makes HMO investing so attractive. Not, though, if you can’t get and retain tenants. If you’re finding that your occupancy rates are good, and rooms are filled then this is an ideal time to think about the next stage: keeping good tenants.
Keeping good tenants depends partly on you and how you manage the HMO – but you cannot control what relationships develop or opportunities arise that lead your tenant to look for their own place. What you can do is reduce the desire to move out by being an excellent host!
Here are a few tips to maintain occupancy levels to maintain cashflow (and a bonus one to help with cashflow due to energy cost increases).
- Attend to maintenance issues proactively and reactively. Tenants despise it when a reported issue is not dealt with and when communication is not effective. This is one of the most common reasons that tenants leave after their fixed term is up – a lack of attention and care to the property. If your HMO is being managed by an agent, how often do they check the property and make suggestions about improvements? How often do you visit to ensure that the property is being kept in tip top condition? Sometimes small and low cost additions or adjustments (such as new cutlery or a window cleaner) can make huge impacts.
- Incentivise loyal tenants by offering vouchers, presents and small gifts to thank them for their custom, and to encourage them to renew for another fixed term. Tenants appreciate being appreciated. Find out what their preference is and what hobbies they have, and get them something personal to say thank you.
- Ask for feedback – regularly! Long standing tenants have stories and information to share which could help you in your business – these tenants are your eyes and ears. Make sure you call them occasionally or ask for feedback so that you can improve in those areas and help make their life easier. If there are awkward or difficult tenants in the property deal with their behaviour so that it doesn’t escalate and so that your other loyal tenants don’t have an incentive to move out.
Finally, it is likely that you will have to increase rents as time goes on – if nothing else, due to the cost of energy we’re all facing. If you have a fair usage clause in your AST be prepared to use this appropriately and transparently. Alternatively if you have no other choice but to increase rents, give tenants enough time to adjust to the new payment, and perhaps offer an incentive to help them to stay despite the rental increase.