Saturday, February 24, 2024
Landlords

Demand for HMOs predicted to soar as energy prices soar

energy prices soar

PPP claims that compared to renting a one-bedroom flat plus bills, renting an all-inclusive room in a professional HMO remains more than 40 per cent cheaper

Soaring energy prices will force more tenants to consider living in HMOs, says a lettings business.

When a recent increase in utility bills was announced in April the Platinum Property Partners network claims to have received over 30 applications for every room to rent within the first 24 hours.

It is expecting a similar response to the weekend’s announcement by regulator Ofgem that the price cap would rise to an average £3,549 per household per year from October.

PPP claims that compared to renting a one-bedroom flat plus bills, renting an all-inclusive room in a professional HMO remains more than 40 per cent cheaper and ensures transparency with just one bill.

Managing director Emma Hayes says: As they struggle to pay current market rents and rising bills, HMO accommodation provides a level of certainty with one monthly payment inclusive of bills, which is more than 40% cheaper than renting alone.

But even HMO rents are not immune to the soaring cost of living and running a business and even housemates will see a rise in rents eventually. The actual cost of running a professional HMO property has increased 50 per cent almost overnight and irrespective of higher mortgage rates, we’ve calculated that our landlords would need to increase rents by £100 per room per property just to cover this increase in energy costs, which they pay for, she says.

Despite HMO investment generating up to four times as much rental income as single-occupancy buy-to-let, there is not an endless pot of reserves, she says.

She says: Professional landlords like ours often rely on the rental income as their main source of income, running the portfolios as full-time, professional businesses, and already swallowed the increase in running costs with the work from home ruling during the pandemic and from energy price hike in April.

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