When You Pick a Market, You Need To Set Your Own Quality Standards


It is understandable that some investors have preconceived perceptions of the affordable co-living/HMO sector: ‘Small, cramped rooms with poor quality furniture in semi-derelict buildings’, to sum it up.

Oh, I forgot to mention: ‘owned by rogue landlords who never do repairs and which are over-occupied by low-quality, unemployed tenants.’

Sounds horrendous – who would want to invest in that sector?

The good news is that the sector has moved on, and there are some great HMO properties. Unfortunately, there are still far too many sub-standard properties which are being poorly managed to the detriment of both the tenants and the owners.

One thing is certain, there is good rental demand in this sector from people who are prepared to sacrifice space and private facilities for affordability and convenience. The key is the location, quality of the property, the level of management.

Meeting the neighbours

As you might expect, some investors/landlords will always stay with formulas that work for them, albeit sometimes with mixed results.

We are currently developing a property in Rochdale; it has large rooms with great communal facilities and has been fitted out to the standard acol finish. A neighbour in the street also owns an HMO nearby, saw what we were doing, and asked to be shown around. As we walked through the house, he told us that in his property he has sub-divided the rooms to create small sleeping spaces. In some, he has installed bunk beds to maximise the rent.

He doesn’t use professional cleaners/contractors, and lets and manages the property himself to save money.

He feigned ignorance when we politely pointed out that his property contravened multiple requirements for HMOs.

Perhaps not surprisingly, he couldn’t understand why we would go to the expense of totally refurbishing the property when it was habitable for a sector of the market in its previous condition.

We explained that we were investing for secure, long-term income with properties that would rent quickly to good tenants, show an attractive net yield, and meet all legal requirements.

Whilst he agreed that our rooms would be very popular with tenants, he felt there was enough demand for his lower quality rooms that he did not have to change. He is probably right and to each their own.

The upside of doing it properly

Whilst the yield from an acol property may be lower than properties such as his, it is still attractive and our clients, tenants and ourselves peacefully at night.

Importantly, there is a real opportunity within the affordable co-living/HMO sector for everyone to benefit through the provision of quality accommodation.

A quality refurbishment costs money and some will say we could lower our standards and save a few pounds. We disagree. We long ago decided that if we put our name to a property, it had to be of a certain standard.

We are positioning acol properties to produce attractive, long-term, hassle-free returns for our clients. The reasons are obvious, including wanting a good night’s sleep. Don’t we all?


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