Social housing became important to me when the tax changes from section 24 came in, because I owned all of my properties in my own name and I’d bought them a long time ago.

Section 24 hit us hugely so I needed to try to find a way how I could make my properties work harder. And one of the ways for me to do that was to convert them from three-bedroom family BTLs into four-bedroom HMOs to lease them to social housing providers.

At the time you could buy a three-bedroom house for around £135,000 and with a minimal refurbishment of around £5,000, you could rent it for £700 a month If I converted it into a 4-bedroom HMO, the total conversion cost including general refurb would be around £15,000, but the rent would then be £1,125, so it was definitely a better option.

I spent approximately £10,000 more in terms of the refurb, but that would be repaid very quickly. The cash flow is significantly more and the return on investment is considerably increased. Now that was an easy decision to make about four years ago because there was a big differential in terms of the monthly rental. A three-bedroom family home at that time was probably renting out for about £700 a month. And the rent that I was getting as a four- bedroom HMO was £1,125 a month. So, there was then a big gap, which means that the additional money that I’m spending to make the HMO compliant gets paid back really quickly.

Rents now in Birmingham have gone up and are ‘going through the roof’. So that same three-bedroom house now will potentially rent out for £1,200 to £1,300.

So, it is a more difficult decision to make now. Do you want to spend the extra money to make the property HMO compliant? There are benefits in doing that. It will take longer to get your payback, but the benefits are the social housing provider is going to pay you rent. You have a company paying you rent, as opposed to individuals, and they’re responsible for maintenance and for the period of the lease, you’re not going to have any voids. There’s quite a number of things that you just need to take into account, not purely looking at exactly what the rental income is going to be.