As the HMO (House in Multiple Occupation) market continues to expand, landlords are continually seeking efficient ways to manage their properties. One increasingly popular solution is enlisting the services of HMO management companies. These specialised companies focus on managing properties rented to multiple tenants, such as shared houses and student accommodations. In this article, we will explore the four compelling reasons why landlords are turning to HMO management companies to streamline their property management processes.
HMO Management Companies – What are they?
Before delving into the reasons why landlords opt for HMO management companies, let’s clarify the role of these companies. HMO management companies specialise in managing properties designated as Houses in Multiple Occupation. These properties typically have at least three tenants from different households who share common facilities like kitchens and bathrooms. Most HMO properties already have an HMO license and tenants in place. HMO management companies assist landlords in navigating the complex regulations and responsibilities associated with managing such properties. Dealing with HMOs regularly, especially concerning tenant management, can be a stressful process.
Reason 1: Regulatory Compliance
One of the primary reasons landlords seek the expertise of HMO management companies is to ensure regulatory compliance. HMO properties are subject to numerous regulations and safety standards imposed by local authorities. These include requirements such as smoke alarms, fire exit doors, room sizes, and up-to-date HMO licenses, among others. Failing to meet these requirements can lead to hefty fines or even property closures. HMO management companies keep landlords informed about the latest regulations. They also conduct safety inspections, and make necessary adjustments to ensure that the property complies with all legal requirements.
Five years ago, I managed an HMO property in Streatham, London, which seemed like a lucrative deal at the time. In theory everything made sense to me. However, this quickly turned into a nightmare. In terms of HMO regulations, this property was in terrible condition. After signing the contract, we discovered that the electrics needed rewiring (the landlord covered the cost), and it even received the lowest possible EPC rating of 1 out of 100. The tenants paid in cash and there was no structure with AST agreements. To make matters worse, I ended up losing £4,000 over the six months we managed it. The lesson here is that before you invest in an HMO property, always perform thorough due diligence, as it can save you thousands. This experience shaped me into the HMO management professional I am today.
Reason 2: Tenant Management and Placement
Tenant management can be a time-consuming and challenging aspect of being a landlord, especially in HMO properties. HMO management companies excel in tenant placement and management. They handle everything from advertising vacancies, screening potential tenants, drafting lease agreements, to collecting rent. Their expertise in tenant management ensures that the property consistently houses responsible and reliable tenants, minimising vacancies and income loss. This process can also be stressful, especially if the landlord faces external pressure. These can include the monthly mortgage payments or may lack the time to meet tenants for viewings.
Reason 3: Maintenance and Repairs
Maintenance and repairs are inevitable in any property, but in HMOs with multiple tenants, issues can arise more frequently. HMO management companies maintain a network of trusted contractors and maintenance personnel who can promptly address any problems. Landlords can rest easy, knowing that maintenance requests are handled promptly,. The property is also well-maintained, ensuring tenant satisfaction and preserving property value. I always ensure that I have a reputable tradesman I can count on for any repair or maintenance job. For instance, at one of my HMOs, we had to replace the roof tiles. The landlord who was an elderly man, didn’t want the stress of managing this. We took it over for him, handling both the payment for the works and managing the entire process.
Reason 4: Financial Efficiency
Managing an HMO property can be financially challenging, with various expenses to consider, including utilities, repairs, and property taxes. HMO management companies often offer financial services that help landlords maintain a healthy cash flow. They assist in budgeting, rent collection, and financial reporting. With their support, landlords can better plan for expenses, optimise rental income, and achieve greater financial efficiency. This simplifies the entire process. At Solutions Property Management, we offer our landlords either a guaranteed set monthly rental income or a profit-sharing arrangement. This is based on net profit after all bills are paid.
Conclusion
In conclusion, landlords are increasingly turning to HMO management companies for four compelling reasons. These include, regulatory compliance, tenant management, maintenance and repairs, and financial efficiency. At Solutions Property Management, we specialise in these areas, ensuring that landlords can sleep easy at night knowing their HMO properties are well-maintained, legally compliant, and financially sound.
My name is Dean Johnson and I am the Director of Solutions Property Management where we provide solutions for HMO Landlords in Croydon and surrounding areas of London. If you have any questions regarding your HMO or would like to work with me, simply get in touch or if you prefer to use facebook, you can also reach me on there. I would be happy to help.