- Not Understanding Your Tenant Type
Understanding what your tenants need and want is crucial if you are going to consistently and regularly rent your rooms. Many tenants move into an HMO for reasons of convenience – they like the benefits of an all-inclusive rent (particularly professional tenants), regular cleaning, and of course superfast broadband. Professional or working tenants might be moving into the area to take up a new job role. They may be earning a basic income, or living away from home. In which case finding cost-effective and convenient accommodation which is also easy to rent is top of their priorities. HMOs provide an affordable and social form of accommodation, which avoids the hassle of organising utilities. However, communication, management and understanding what your tenants need is also key to ensuring low voids.
2. Non- Compliance with HMO Regulations
Did you know that there are over 170 pieces of regulation and legislation when it comes to managing property, including HMOs! These cover all aspects of property management including licensing regulations, landlord and tenant legalities, money management, building regulations and planning permission. Being compliant with the government’s and local council’s requirements is vital, as failure in any area could result in a heavy penalty. If you’re not sure what you should be doing, the first place to check is your Local Council housing standards team. They can advise you on licensing rules, room sizes, and fire & safety features that you will need to install.
Another consideration is whether your HMO will require planning consent. Article 4 directions (Town and Country Planning) can require planning permission to change a property from a C3 class which is a single household dwelling to a C4 class, which is what most mandatory HMOs and additional licensable HMOs would fall under. Any HMO occupied by more than 6 people will be in a class of its own, also known as Sui Generis. If you’re a first-time HMO landlord, having experts at hand who know the regulations and local council’s specific requirements, is a huge benefit and extremely reassuring.
3. Property Maintenance
HMOs require a higher level of maintenance than a single buy-to-let because there are more people living there and using the facilities on a daily basis. In addition, because the responsibility for almost everything falls to the landlord, even cleaning communal areas and changing light bulbs and smoke alarm batteries becomes a headache. Having regular proactive checks is crucial as poor maintenance procedures can cost you dearly, especially if it leads to a penalty through non-compliance. A few tips to help you manage your properties more effectively:
- Use a suited keylock system that gives you a masterkey and sub keys. This will save you huge amounts of time managing keys
- Install a small key lock box outside the property – somewhere discreet. This will allow trusted tradesmen to enter on receipt of the code rather than having to meet you there in person
- If you are bombarded with calls from tenants, set up an out-of-hours answering service who can take your calls and send you a text and email.
- Note down all the maintenance issues that crop up. In future you can use this as a tool to predict certain issues that regularly occur and take action to reduce them.
4. Doing Everything Yourself
Many landlords believe that they can deal with HMO standards, find tenants and carry out repairs themselves. This can lead to an unmanageable amount of work. Well-run and well-maintained HMOs have good teams in place to be able to deal with everything. For a landlord who is looking for passive income and financial freedom from their property investments, working hard to keep on top of everything means that this is not the dream they originally set their sights on. Developing a power team around you who can help with the practical side of the business is critical to ensure you work on and not just in your business.
5. Not Using an Agent
Many property investors start out with a dream of having a portfolio that will make them money and give them more time. With HMOs, there are so many specialist areas of management that you can find that self-managing your portfolio is just not worth it. In these cases, enlisting the services of a specialist HMO letting agent is almost certainly the best option. With experience and knowledge they can advertise, tenant and maintain your shared house more effectively and efficiently than you. A good agent will have a team already on hand, complete with the necessary advertising platforms, tenant application process and checks, a 24/7 phone and maintenance reporting service, and cleaning companies. They are required to know the law around rent arrears and evictions and can advise you about what to do if your tenant gets into difficulties. Overall it makes sense for you to hand the hardest and most intense part of investing to a company who knows what it is doing, leaving you to do what you love!
Learn to run your business as a business and it will pay you well!
For more information about HMOs and how to make money from just a handful of properties please go to www.hmosuccess.co.uk