Published by Ryan Windsor
on 07/12/2024
Whether you’re new to investing or you’re an experienced landlord, managing a HMO property can be incredibly time-consuming and challenging. Attention to detail in keeping properties well-maintained, staying on top of the laws and regulations, and the complexity of finding new tenants can all be stressful. For these reasons, more and more landlords are turning to HMO management companies to handle all the issues for them. There are many benefits to working with a HMO management company, which we’ll outline here.
PROPERTY MAINTENANCE
There’s no denying that managing a rental property and keeping it in good condition for tenants is an ongoing process, but that task becomes even more challenging when it’s a HMO. From dealing with faulty plumbing to repairing cracks in the walls and making sure the décor stays fresh and appealing for residents, there’s a lot to deal with.
An HMO management company can help you stay on top of these issues, acting as a first point of call for your tenants when they face a maintenance issue. With an on-site maintenance team, we can also often keep costs down for you which helps improve your bottom line as a landlord.
REGULATORY COMPLIANCE
HMOs are subject to a variety of laws and regulations, and these are constantly evolving so staying on top of them is critical to ensure you don’t run into problems with the law or face hefty fines. Landlords of large HMOs, defined as those with five or more unrelated tenants, require a licence, for example. Licensing ensures the property is suitable for the number of occupants and that the manager is “fit and proper”. Additionally, all HMOs must comply with the general landlord-tenant rules, such as safety measures, maintaining utilities and common areas, and waste disposal.
Management companies will ensure that your HMO is always compliant with the relevant requirements, whether it’s licensing and insurance to health and safety. This leaves you stress-free, confident that your HMO rental property is safe and legally sound.
MANAGING TENANT COMMUNICATIONS
Making sure that multiple tenants in a single property are happy and satisfied with the property can be hard to manage. To avoid having to deal with tenant complaints, or late-night calls about property issues, an HMO property management company can handle them for you. The team act as an intermediary between you and the tenants, ensuring that clear communication is always maintained and that any issues are resolved in a timely manner.
MARKETING YOUR HMO
Finding new tenants can be difficult, especially if you have several units to fill. One of the biggest stress-relievers for HMO landlords is having the property marketed for them by a professional management team who can source new tenants, reference check them and ensure that reliable renters are found to keep the property profitable. A reliable firm will have a strong online presence, and this can make finding tenants much easier, rather than an individual landlord trying to compete with other investors in the market.
With their valuable market insights and professional advice, you can make informed decisions and understand market trends which may affect tenant sourcing or property marketing. For example, they’ll have an insight into the optimal rental levels or improvements you can make to make the property more appealing to tenants or increase your rental yield.
SMOOTHER FINANCIAL MANAGEMENT
Working with a professional HMO management company can significantly streamline financial management for landlords, providing a range of benefits that enhance profitability and reduce administrative burdens. These companies offer expertise in setting competitive rental rates, ensuring maximum occupancy, and minimising void periods, which directly boosts rental income.
They’ll handle the collection of rent and manage arrears, reducing the risk of financial loss due to tenant default. Additionally, professional management firms maintain meticulous financial records and provide detailed monthly statements, offering landlords a clear and organised view of their income and expenses. This financial transparency simplifies tax preparation and compliance, saving landlords time and potentially reducing their tax liabilities through effective expense management.
24/7 RESPONSE TO EMERGENCY CALLS
HMO management companies offer a crucial 24/7 emergency response service that significantly enhances tenant satisfaction and safeguards the property. This round-the-clock availability ensures that any urgent issues, such as plumbing leaks, electrical faults, fire risks, or security breaches, are addressed promptly, minimising potential damage and disruption.
By having a dedicated emergency response team, these companies can quickly dispatch qualified contractors or maintenance personnel to handle the situation, ensuring that tenants feel safe and supported at all times, and above all are kept protected from harm. This rapid response capability not only prevents small problems from escalating into costly repairs but also demonstrates a commitment to tenant welfare, fostering a positive living environment.
FINDING THE RIGHT HMO MANAGEMENT COMPANY
Start by conducting thorough research and seeking recommendations from fellow landlords or industry professionals. Look for companies with strong reputations, positive reviews, and a track record of successfully managing HMOs. It’s important to choose a company with substantial experience in HMO management – verify their understanding of local regulations, tenant management, and internal/external maintenance checks that are sometimes specific to HMOs, rather than general rental properties.
You should also evaluate the range of services offered, making sure they cover essential areas such as tenant sourcing and vetting, rent collection, maintenance, emergency response, and financial reporting. A comprehensive service package can save you time and hassle, so the more services they include, the better.
HMO MANAGEMENT COMPANY FEES
HMO management companies typically charge a percentage of the monthly rental income as their management fee. This usually ranges from 10% to 15%, depending on the level of service provided and the location of the property. In addition to management fees, there may be a one-time fee for tenant sourcing, which covers advertising, tenant vetting, and contract setup. This fee often ranges from 50% to 100% of one month’s rent.
Maintenance and repair costs are usually additional and can vary widely. Some companies offer maintenance packages, while others charge on a per-job basis. It’s crucial to understand how these costs are managed and whether there are any markups. There may also be renewal fees for extending tenant leases or renegotiating contracts. These fees can vary but are typically lower than tenant sourcing fees.
As any landlord will know, investing in HMOs comes with its set of challenges and ongoing tasks, but working with a professional management company can certainly make the process easier. It’s an investment that can actually boost your profits as a landlord and makes the process of maintaining and managing your HMO investment that much easier and less stressful.
For further assistance with your HMO project, schedule a complimentary discovery call; we’ll be happy to help you.
Published by Ryan Windsor
on 07/12/2024
Ryan Windsor, Development Director and co-founder of HMO Architect, brings over 15 years of specialised experience in HMO development to the table. Having consulted on nearly 2,200 projects, Ryan is a highly seasoned HMO landlord with a vast and influential property network. He began his real estate journey at just 17, rapidly amassing a wealth of experience that sets him apart in the industry. Beyond his professional successes, Ryan is passionately dedicated to giving back, leading numerous charitable initiatives that make a meaningful impact on local communities.
