Why HMO management is a growth area for lettings agents
A Chelmsford-based agency is providing consultancy services to agents looking to break into the lucrative HMO (house in multiple occupation) market.
HMO management is an opportunity for letting agencies to drive more revenue, says the director of a lettings agency that’s established itself as an expert in the area. Neil Baldock, who co-founded Chelmsford-based Charles David Casson with his brother, Matthew, says the pair saw a niche in the market for HMO management after the law changed two years ago, which meant all properties with five or more people living in them had to be licensed.
“That's driven more and more landlords to want the services of a letting agent to manage HMOs, because there is more compliance and more work involved.” The added compliance involved means that letting agents can also charge landlords a higher fee to manage an HMO, says Neil.
But there are other advantages to managing HMOs. “One of the reasons we like managing HMOs is, if you manage 6 properties then you have to visit six different places, whereas with an HMO you have six tenancies within one property and there's only one site you've got to visit - there's only one boiler to break down, one garden to look after, that kind of thing.”
Neil says the market for HMOs has changed substantially over the past decade. “Historically, these properties have had quite a bad reputation, seen as lower-end properties and hard work,” he says. “But actually, they've really come up and the properties we deal with are for professionals and they’re generally very high-spec, fully furnished, all-inclusive. So if you put the right systems in place and you set them up correctly, then yes they can be more work, but they're not that much more work.”
HMO management has also led to more opportunities for Charles David Casson. “The type of person that invests in a HMO, generally that isn't their first investment property, they'll generally have other investments as well,” says Neil. “We're also finding more and more developers are talking "super HMO's". We have one in the pipeline that's 13 bedrooms in Colchester, and more of those conversations are starting to happen.”
Neil thinks more letting agencies should start looking at HMO management as an opportunity and is currently developing a national HMO management group to provide consultancy services to agents looking to break into this market. “The level of the rent you're dealing with is bigger, the type of clients you’re starting to deal with, and the opportunities that it’s leading you to are really different.”