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Four Reasons why HMOs are Recession Proof

So last week, talked to you about why we specialise in high cash flow strategies. We promised to spill the beans on the reasons why HMOs are all but recession proof.


So here they are:


Commercial Valuations


Investment valuations will generally provide a premium valuation compared to a bricks and mortar valuation. They are also beneficial because they will be affected much less by fluctuations in the residential housing market.


Cost of Living


I’m sure you don’t need us to tell you that the cost of living is soaring. Interest rates were increased again last week, and home owners are now starting to be directly affected by the rising mortgage rates. Those who are coming to the end of their mortgage terms are having their monthly payments doubled in some cases. First time buyers are also holding off getting on the ladder in favour of rental accommodation, in the hope that rates come down.


Demand


Naturally, these above factors increase rental demand at a time when there is already a shortage in rental properties. Demand is increasing quicker than properties are becoming available, particularly in city centre locations. Our strategy of providing excellent, high quality, city centre accommodation is ideal in a market like this.


Increase in Rents


With increased demand comes increased rent. Private rental prices in the UK rose by 3.8% in the 12 months to October 2022. This is up from 3.7% in the 12 months to September 2022. HMOs offer up to three times higher rental yields than standard properties, with no sign of this slowing down. This makes them an incredibly attractive investment strategy.

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