The Importance of Becoming Your Own Local Expert
The private rented sector, particularly the HMO market, has seen increased demand, resulting in rising rents. Simultaneously, landlords are experiencing a decrease in void periods, which assists investors in minimising the time that rooms sit empty.
In this blog, we’ll discuss what’s influencing supply and demand, rents, and vacancy periods, as well as how location remains important and the importance of understanding your local HMO market.
Tenant Salaries and Void Periods
More good news for investors: vacancy periods for privately rented properties are decreasing. According to Goodlord data, only one region experienced an increase in voids during February. Because landlords are renting out their rooms and HMO properties more quickly, the amount of rent lost is decreasing!
At the same time, average tenant salaries in England have risen since the beginning of the year. In 2021, the average tenant salary was £26,111. This has risen dramatically in recent months, with average salaries in February reaching £28,115.
This is good news as the UK’s cost-of-living crisis continues, with inflation rising even higher and energy bills, oil prices, and food prices skyrocketing. It is critical for wages to keep pace with rising inflation and living costs, allowing tenants to continue paying rent and other household bills.
Rents, Supply, and Demand
Good quality housing stock is still in short supply and in high demand. Professional HMOs have been in particularly high demand as many workers returned to the office and COVID-19 restrictions eased.
While the rise of the Omicron variant slowed the sector’s momentum at the start of the year, the sector quickly picked up the pace. And for many landlords, it has felt like the HMO market is accelerating!
Except for London and the West Midlands, according to recent SpareRoom data, all UK regions saw an increase in rent when comparing 2021 to 2019. Northern Ireland, South West England, and Scotland had the highest rent increases last year.
Demand is outstripping supply in most parts of the country. This is a trend that is affecting the private rented sector as a whole, and it is one of the major factors driving up rents.
Furthermore, several studies show a need for more housing in the private rented sector, and the HMO sector is one of the areas where we can actively create new rental units. This will help bring more high-quality properties to market while also relieving pressure from the housing shortage.
Location Is Everything, SO… Become Your Own Local Expert
When it comes to HMOs, as we all know, location is everything. This is especially important because strong demand, rent increases, and decreases in void periods aren’t happening everywhere. According to SpareRoom data, rent for rooms in London is at its lowest level since 2014.
The location of any property investment influences its success. As a result, it’s critical to become an expert in the areas you’re investing in and understand the intricacies of the local HMO market. What is the state of supply and demand? What are the competitors up to? What are the profitability and long-term capital appreciation prospects of the rental strategy?
SpareRoom is a great place to start because it has a massive amount of data that can help you understand the competition as well as supply and demand in a particular area. Work on understanding your local HMO market and how to attract the right tenants to your properties to effectively build a sustainable property portfolio.
