As we enter another (hopefully) short lockdown period in much of the UK, the ongoing challenges of tenant and property management could once again become more acute for those who specialise in the broader ‘shared accommodation’ (HMO) residential property sector.
It’s certainly been a very challenging year with the impact of the coronavirus having caused huge disruption to tenant demand in some niche HMO sectors. Those whose business model relied on overseas students and weekday city office workers as their primary room occupants will likely have faced some real difficulties with voids, unless they were able to pivot fast towards a different tenant group.
In the second of a series of articles looking at this ever changing market I spoke with a number of very experienced property investor-landlords with many years of experience in the HMO sector to find out what they have been experiencing this year. You can also read about the related concept of Co-Living in a separate article in this edition on page 15, a topic we have covered a number of times with articles in recent years.
My first interview was with Diane Greenwood, based in Yorkshire and who, with her partner, runs a specialist letting agency The House Share Company and also a cleaning business alongside their own property portfolio, so they obviously understand what it takes to deliver ‘service’ to their customers. Diane first explained what they have been doing of late and how their business model has changed. “We’ve recently bought a commercial building, an ex-estate agency/retail property, which we have converted into four self-contained flats with two retail shops on the ground floor area rather than the one previous unit. The works should be completed in just a few weeks time and so given the impact of Covid on the retail property sector I am now focused on very carefully choosing the types of business that we let the retail premises out to.”
Given these initial comments, I asked Diane whether this latest property acquisition meant that they were no longer focusing on the HMO sector due to Covid or more competition. “No not at all, we have our letting agency which currently manages around 160 rooms in west and north Yorkshire. In key locations we are still doing HMO’s but we have had to evolve the model a bit as the market has become tougher.
“Tougher, because I would say in all locations, there is now more competition, with an increase in HMO room supply but also it has been tougher to manage the properties due to Covid and dealing with the practicalities during and after the first lockdown period. In June to mid-July it was very busy as we had pent-up demand to deal with. Then into August we had a quiet period with room oversupply quite evident and lots of empty rooms being on the market in all areas.