HMOs – Seems Everyone’s At It!

Not so long ago, as an HMO Landlady I was looked upon as the poor relation in landlord terms.  I would attend meetings and be one of the only HMO landlords NOT housing students and my peers would sniff disdainfully or snigger as I defended my market.  How the world is a-changing…  (well, my world – I think the actual world has enough on its plate).

This week I was asked to advise a landlord who was hoping to rent to students but has changed market due to an oversupply of accommodation and our town’s university cheekily about to charge the same annual fees as Oxford and Cambridge – talk about delusions of adequacy.  I was flattered that he’d asked me to help give him some tips and advise the layout – no one’s normally interested when I wax lyrical about HMOs.  He told me he was going to place the ad online only to attract working people and to presumably deter anyone not suitable from seeing the ad in print as they wrap the newspaper around their bottle of vodka.  He’s going to do just fine as he’d already decided on a comprehensive referencing technique and drawn up room contracts – it took me 2 years to get to that stage!

Then, I was asked by a letting agent to look at a six bedroomed house that he’d been asked to tenant.  OK house, OK rooms but with a prevailing smell of damp, unfinished bathrooms, but all the fire regs were in place and the landlord wanted £400pm PLUS bills.  Now, bearing in mind my most expensive room is £100pw incl all bills for a huge room, that’s steep.  He also revealed that the landlord was trying to raise £2.5 million to buy more HMOs.

The next call came from someone wanting to give out my number to a family member who wants to get into HMOs for their yield.  In the five years I’ve been operating HMOs not ONE landlord has ever thought it was a good idea to let property this way and advised me to jump ship in favour of students.  (Not my market of choice due to their lack of domestic skills – even my own children manage to clear up after themselves).  They didn’t understand that, buying at the height of the property boom in 2007 meant I HAD to do HMOs otherwise the buildings couldn’t pay.

The Effect

So, for five years I’ve been paddling away, becoming accustomed to the sneers, riding the storms with the help of my landlord association saying “Well, what did you expect?” and having many moments of wanting to winch myself to safety to hold down a normal job.  Judging by the number of ads in the paper this week, lots of landlords are riding the Room Letting wave – but will they stick with it?

I put an ad in the paper this week and only received two calls: one from a bloke who, asked where he’s living now, said “On the street” and it took every ounce of will to tell him I couldn’t help and hang up.  For the next half hour I was going to call him back but my head took over to remind me how many time I’ve been proverbally shafted by the homeless over the years.

The next respondee was Ashley: he told me his ex-girlfriend was having an affair and managed to get him sectioned based on false evidence of depression and self harm with a supporting testimonial from his mum.  He has now been released and is being housed in a B&B at a cost to Housing Benefit of £140pw plus a top up of £40pw and an £18pw service charge.  Perhaps I could throw in a bowl of cornflakes and a cuppa every morning and charge £198pw!  To summise: plausible story, the first I’ve ever heard involving sectioning and, as I’ve said before I’m a sucker for a sob story.  Unfortunately, he failed my referencing test – he couldn’t look me in the eye without jumping from one leg to another.

So, once the reality of HMO landlording has worn down even the sharks, the bottom feeders such as myself will still be going strong…………….!!

9 Comments

Filed under Future of HMOs, Management of an HMO

9 responses to “HMOs – Seems Everyone’s At It!

  1. Ben Reeve-Lewis

    More landlords would take on those difficult tenants if they knew that there would be suport workers in the background to help out. You are a landlord not a social worker HMOL and you did right to walk on those potentially difficult cases.

    And more landlord will be getting into HMO work, especially come January when SRR shit hits the fan.

    Why not start marketing your services as an HMO consultant specialist?

  2. Ben, you flatter me! HMO landlords aren’t best known for giving away money when they think they can do it themselves. However, I would be more than willing to give any potential landlords advice on this market. The trouble is, now I’m not taking the undesirables, HMO work has become a bit dull and routine.

    I can’t help feeling that, if HMO landlords don’t take LHA claimants and are all going after the sensible workers, there’s going to be an awful lot of homeless tenants who are only entitled to a room. Hard one to sort out…….. …….. Mr Cameron/Schapps/Clegg, can I please have a property to house these people and write stories about them?

  3. Ben Reeve-Lewis

    Ah well you’ve hit the problem square on. Huge deposits mean that many people cant afford deposits to buy their own homes so more people are renting and rents are so high as a result that they cant afford to save a deposit whilst renting either. Hence the term coined by the Halifax “Generation rent” a whole generation who because of restrictive leding practices and astronomical rents will never own their own homes.

    HB payments direct to tenants mean they dont want benefit tenants and also dont need them while there are so many working tenants looking for homes. So wehre do those tenants go?

    We have been told in my London borough that we have lost over 2,000 HB tenants off of the list in the past few months. Where have they gone? All got jobs? cant see that. They will have moved out of borough.

    The richer London boroughs Like Westminster kick theirs down to us in inner city, we pass them down to suburbs who presumably pass them on to Kent, then to Sussex before being helped off of beachy head and being told not to stop swimming until they can smell that Pain au chocolat.

    The only back stop is people like you willing to give them a hand. When HB cuts were first mooted one labour MP said it would be like the Highland clearances of the 18th century, he was right and who cares when society can simply label them as rioters, chavs and workshy.

    I doubt the highland crofters would be able to spot the difference if they were brought forward in time, just the haircuts have changed

  4. I, for one, would be more relaxed about renting a room to a housing benefit claimant if the rent came direct to me. It allows me to trust the tenant from the outset and be in a better position to help rather than having to spend time chasing the council and worrying about where the rent’s gone! I know that this is really my market and I’ve had to pull away from it when they introduced the new changes a couple of year’s ago. I’ve just had an interesting conversation with someone who’s brave enough to advertise their HMO management service and how they structure their fees and strategy – I’m sticking to my guns and will concentrate on the slightly odd, but lovable long term tenant.

  5. Ben reeve-Lewis

    You are a one off. Thats why I love your work. If only more landlords were like you

    • And, if that were the case, I’d have no tenants. Do you know that I’m so friendly with one of them that she babysits the kids and has the dog for me when I go away? The other day, my 5 year old son was absolutely screaming and running after my car as I went out for the evening. When I asked her if it was traumatic and apologised for his behaviour she said “That’s nothing. Remember, I volunteer for the homeless and used to work with adults who have severe learning difficulties. I think I can handle your son!” Unfortunately, I wouldn’t trust the rest of them with the dog – they’d probably take him to the pub and leave him.

    • Sorry, also meant to say “thank you” for your comments. Much appreciated.

  6. Tony

    I too only rent rooms in my Reading-based unlicensed HMOs to working people, usually graduates in their 20s and early 30s on their second or third job. I have occasionally taken tenants on benefit or part-time work, but have always ended up regretting it. Of course these are gross generalisations, but the financial discipline, the social-behavioural capital and the self-resourcefulness that helps members of a houseshare to rub along is too often lacking in benefit claimants. When I’m advertising a room and I get a call from a young lad on benefits, for example, or a recent immigrant or a former homeless person who’ve pre-arranged a deposit guaranteed by the council and been encouraged to try the PRS by a friendly housing officer, 9 times out of 10 when you arrange to show them the room, they don’t show up, or you get a call 5 minutes before the meeting (after I’ve travelled 30 minutes to be there on time) saying something’s happened and they won’t be coming. In contrast working people are more on the ball, they’ve got transport, they understand time-keeping, they know about references, they have holding deposits and upfront payments ready to go. And of course they also don’t come trailing a great bureaucracy of benefit clerks, EHOs, case officers and the whims of a housing benefit system that withdraws benefit on a pound for pound basis if the “client” admits to working part-time and that refuses to pay the rent direct to the landlord.

    I agree life is getting tougher for young people on benefits and I don’t have any easy solutions, because it looks to me like demand for houseshares is just going to keep on growing, from working people as well as those on benefits, and I don’t see many landlords adding to the supply. HMO househares are still seen as the “messy”, complicated area of landlording, compared with just having a single person or a couple with no children in a small flat or house, or the anonymous atomised world of bedsits. I’m concerned that reasonably experienced landlords like me are prepared to run houseshares occupied by students or young working people, but we steer clear of benefit claimants because of their bad reputation. These claimants are the people who end up in the grottiest areas of town with the worst landlords, fighting for space with the illegal immigrants, or they spend years sleeping on their friends’ floors, invisible to the housing statistics and the social commentators.

    Meanwhile, no-one is building new housing designed to be run as HMOs suitable for benefit claimants: most of the units are aimed at single people and nuclear families, you get dedicated new student housing in certain locations where the profits are good, and large developers will include housing suitable for the elderly and infirm to win brownie points with the council’s masterplanners. BTL landlords seeking profits will move in and convert some of the 4/5-bed private houses into HMOs for young professionals, even if this means every room bar the kitchen is a bedroom, and there’s parking havoc on the too-narrow streets because there are now 5 or 6 cars per house instead of the 1 or 2 allowed by the planners who have wish-fulfilment complexes about forcing everyone onto public transport. But young people on benefits? No-one’s building housing for them. And if a housing association or an enterprising build-to-let developer with a bit of a social conscience tried to build such units, the response from planners and the neighbours would be little different from their reaction to bail houses and paedophile rehabilitation centres being built in the new housing estate . . .

    • Hi Tony. You’ve hit the nail on the head in that the HMO market is on the increase. They can offer great returns for a bit more time but I should think travelling 30 minutes is annoying when a viewing lets you down. I, too, have been advised to stick to the professionals which I do now but they don’t provide very interesting stories! You’re also absolutely right in that HMOs are viewed as time consuming and messy but I think if you have the right attitude they can be rewarding. It sounds as though you have lots of knowledge in this area and thank you for taking time to read the blog and let me know about your experiences. Good luck, and I’m sure we can change the face of HMO landlords!

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