> Why Do So Many Letting Agents Steer Clear Of HMOs?
word on the town is...HMO (House of Multiple Occupancy)
properties are the lucrative way to, not only make
your property deals stack up, but give you very
high yields, compared to standard lets. However,
HMO management is always a challenge, even at the
best of times, so for anyone deciding to enter this
perceived cash cow area of property lettings is
landlords enter into the world of property investment
with the idea of instructing a local agent to manage
their HMO investment for them, but then when they
try to place their instruction with an agent they're
surprised to find that most letting agents won't
touch HMO's with a barge pole! No agent appears
to want to let HMO`s. Why is this?
Firstly, the Housing Act 2004 makes
it quite clear that if you are managing a property,
on behalf of a landlord, then you are classed, in
law, as being the legal 'Property Manager' which
means you must be fit to do so. Therefore, in order
to be deemed fit to manage HMO's, the Agent has
to attend the appropriate training courses to be
able to manage licensable properties. Although the
training is not onerous, it is not something that
many 'Property Managers' will automatically do,
unless the letting of HMO`s is the mainstay of their
So, if HMO's are so lucrative...
why don't letting agents manage HMO`s?
"Here's a Few Key Reasons Why!"
One of the major problems with many
HMO properties, currently out there in the market,
is that they are simply non-compliant. They have
not been converted with any regard to regulations,
and in many cases, if they have been converted,
they've only been partially converted, and not adequately
enough to be officially fully compliant.
This can be a real headache for
property managers, putting them in a very difficult
situation. As, within law, they can become liable
to prosecution and serious fines due to properties
not being fully compliant. So, only someone that
really understands the HMO regulations, inside and
out, can undertake their own compliance checks to
ensure everything is all present and correct. It's
only with this experience and expertise that they
can be confident about taking on the management
of HMO properties.
key reason why many Letting Agents refuse to manage
HMO properties is the "Hassle" factor.
Many agents feel that a lot of people living in
one property would be "Hassle" and in
some poorly managed or poorly maintained properties,
this could very well be the case.
you have a lot of people leaving under one roof,
then naturally additional gripes and issues can
occur, as the more personalities involved, the more
pressure or chances of friction being created. With
regards to your standard lets, when a typical family
rents a property, there is usually a natural hierarchy
of authority, with the head of the family resolving
disputes or lubricating the process of finding a
consensus of opinion together. But when there is
no natural authority figure, then the property manager
has to keep stepping in to fulfil that role.
further key point is the fact that many agents will
shy away from this because the rents for each room
are generally quite low, and the return for agents
are low. Also the fact that the typical demographic
of tenants in low quality HMO`s can usually be the
deprived or low income level, leading to the Agent's
impression that this will create even more hassle
to contend with.
to sum up, with the promise of low returns, awkward
tenants, and high responsibility, most agents just
don't want to know!
Know, It Can Be Done!"
a Letting and Property Management Agency, if you
have appropriately trained staff on board to manage
and monitor your HMO properties, with solid systems
and processes, specifically for the management of
HMO properties, for example, checking the fire alarms,
cleaning the communal areas, gardens management,
parking, bills management and inter tenant disputes,
then you're happy to take on instructions for HMO's.
of the keys to HMO success is to have a very good
selection process for the type of tenant you allow
in to the property. This will certainly prevent,
or dramatically reduce, any potential hassle. This
is coupled with a specifically designed fee structure
for the management of HMO properties.
an agent has the systems, processes, and training
in place, to be able to manage HMO`s, they can be
an extremely lucrative business for any agent.
Lawson CEO of Concentric Lettings
you're serious about your property business
in 2011, you will get this report, right now
and read the report today.
month after month, having dozens of £400
deposits in your bank account,with almost
no chasing the rent and little tenant support—ever.
What an easy way to earn a living that would
be! You can have that life. I'll show you
HMO's Are The Perfect Property Investment
Are Not Problem Free
HMO's Are More Than Just a HMO
HMO Survival Guide
Managing Your HMO Effectively
Money With This Report
About the Author
is both a Lettings business owner and a UK Letting
Business Professional, who has over two decades
of owning and running Lawsons Letting Agents.
Concentric Lettings is a National Multi-Branch
Lettings Agency, set-up to forge a presence
right across the UK. Each branch is run and
operated based on the highly successful Lawsons
Lettings Agency in Wolverhampton, West Midlands
which has successfully been market leader in
their area for over 20 years.