If you have a property and are considering turning this into either serviced accommodation or a HMO, here are a few things you should consider.
Firstly, let us explain the difference between serviced accommodation and a HMO.
Serviced accommodation is fully furnished, short or long-term accommodation with facilities similar to a hotel. For example; room service, laundry rooms, recreational rooms etc. A HMO is where multiple tenants live in separate rooms in a house together, often sharing a toilet, bathroom, living space, kitchen etc. with the other tenants.
What generates a higher income?
From a landlord and letting agent point of view, HMO’s often generate a higher rental income. This is because multiple tenants are bringing in money every month for as long as their tenancy agreement requires them to, resulting in higher cashflow. Established HMO’s are also easy to resale which increases the market potential, however the running costs of HMO’s are often higher than that of serviced accommodation due to licensing, tax and insurance. They also require a higher standard of management which can be costly.
With serviced apartments there are no letting or management fees, meaning you are saving money in these areas and there’s often a low vacancy rate. However, serviced apartments do have an additional cost of bedding change and cleaning. Also, poor reviews can effect occupancy and some tenants will only want very short-term leases meaning there’s no time for referencing and background checks.
What does the tenant think?
From a tenant’s point of view serviced accommodation is often considered more private as tenants have access to their own kitchen, bathroom and living space. Tenants living in HMO’s often have to share the facilities in the house with the other occupants, but find that HMO’s are more affordable especially for couples sharing a room.
Who do they appeal to?
HMO’s appeal to students and working professionals due to the cost of renting a room being significantly cheaper than renting a property or paying a mortgage every month. In most HMO tenancy agreements, bills are usually included in the monthly/weekly payment and so this is less of a burden for the tenants to worry about.
Overall HMO’s are generally more cost effective for both Landlords and Tenants and if you’re looking for more long-term accommodation this should definitely be considered.
If you are looking at either of these options and want to know more, please don’t hesitate to contact us on. Tel: 01604 644 449 Email; email@example.com