The HMO market is saturated and rent to rent is dead
Hello, hello, hello it’s Stephanie here and welcome to episode 38 of the Rent to Rent Success Podcast - come on in and get comfy.
Today we’re talking about whether the HMO market is saturated.
So, if you’ve had this concern and have been wondering about this, this one’s for you.
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Let’s get going with today’s topic...
The HMO market is saturated & rent to rent is dead!
I’ve seen comments like this on Facebook.
Often from people who have no HMOs!
Once you know something, it can feel like everyone and their dachshund knows.
Now that you are moving forward with your rent to rent business, you see HMOs everywhere.
Yet the truth is that most people in the UK do not know what an HMO is and they’ve never heard of rent to rent.
Although, when you’re in the property world it can sometimes feel as though everyone is doing it.
I start here because your perception may be skewed by your environment.
In an article in The Telegraph newspaper, I was asked to comment on HMO investment so I’ve looked into the stats on this a lot recently.
We know there is a shortfall in affordable housing.
A National Housing Federation and Crisis report conducted by Heriot-Watt University reveals that the UK needs to build 340,000 new homes every year until 2031 to meet housing demand.
And at least 145,000 of those homes need to be affordable*.
In the 30 years between 1959 and 1988, 7.4million houses were built in England.
In the 30 years 1989 to 2018 only 3.3million houses were built.
That’s a shortfall of 3.1million homes – over 104,000 homes a year over the last 30 years **.
In 2018 the UK Government estimated that there are around 4.5 million households in England housed in around 497,000 HMOs in England and Wales ***.
Many councils have introduced planning changes like Article 4, making it more difficult to create a new HMO - this means that the number of HMOs is growing less quickly.
This reduces supply without decreasing demand, meaning there is actually more demand for the HMOs.
Young professionals and contractors make up the majority of our housemates.
Many of our housemates could easily afford to rent a one-bedroom flat but prefer to share as they love the convenience of having all housing costs in one payment, no utility bills, no broadband payment, fully furnished and ready to roll.
Often, the people claiming that the HMO market is saturated have substandard properties in the wrong areas or don’t have any HMOs at all, just a lot of hot air.
We explain how to choose the properties that will rent consistently and how to ensure your properties are among the best available for whichever part of the market you’re targeting.
I talk more about what to look for in an HMO in episode 29:
Supply is reduced.
Demand is increasing.
The HMO market is buoyant not saturated.
In the next episode I’ll talk about HMOs post-coronavirus.
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Until next time, have a great rest of the week.
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See you soon!
Stephanie & Nicky
xx
* https://www.showhouse.co.uk/news/uk-needs-to-build-340000-new-homes-a-year-until-2031
** https://blogs.lse.ac.uk/politicsandpolicy/housing-crisis-what-should-the-next-government-do/
*** http://researchbriefings.files.parliament.uk/documents/SN00708/SN00708.pdfmarket.
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