Are HMOs worth it?

If you look at the market at the moment (2023), there is a lot of concern over the profitability of Buy To Lets (BTLs).

It’s easy to understand why. Mortgage interest rates have rocketed in the last 12 months and no one has experienced that level of interest since 2007. In addition, energy prices have gone up by a factor of 3 due to the issues in Ukraine.

If you have a HMO, with all bills included, that’s going to take a massive hit on your bottom line. Tenants are not going to be thinking too much about conserving energy, either. What used to be a couple of hundred pounds a month on gas and electric is now possibly £600+ per month. Ouch!

HMO Management

Not only are the costs increasing massively, but the management side of things is not too easy either. Having said that, if you choose the correct tenants you can minimise the level of stress they bring to your life.

That doesn’t just mean responsible tenants, it means ones who have a similar lifestyle. For example, all office workers or all shift workers. Having people who lead a similar lifestyle will mean there is more chance that they will relate to one another and be able to understand if their actions could cause issues to others in the house.

What About Single Lets?

Single lets are under a lot of pressure at the moment, especially if you purchased within the last 5-6 years when prices had gone back up after the 2008 crash.

A large increase in the interest rates means some might not even pass the stress tests that lenders apply to decide if they can lend to you or not.