As people are probably fairly fed up with me commenting on the HMO lettings market in Hereford, we thought it might be a good idea to bring in another expert opinion on the HMO and lettings market in Hereford and comment on her thoughts on its current state and the future of the HMO market in Hereford. Joanna Cobb not only runs Cobb Amos, Herefords leading Estate Agents and predominately sells the most HMOs in Hereford but also has been an HMO investor herself over the last 20 years and therefore is very much an authority on the property market in Hereford and more specifically HMOs. If you are a current HMO investor or looking at getting into the HMO game in Hereford, I urge you to read this blog article to get a better understanding of the market and what it might hold for the future.
- Can you briefly describe the change you feel in the HMO market in Hereford over the last few years?
We have found that our HMOs have become easier to manage over the last few years because the type of tenant has changed. When we first started, there were lots of people just out of university but stil treating an HMO like a party house and not knowing how to wash up etc. The other type of person was someone who was just separating or divorcing and needing to get out quickly and didn’t have many belongings with them and just needed to sort themselves out for 6-12 months and then they would go and find someone a little more suitable long term to rent but HMOs provided a great stop gap for them.
Now we are finding because it is quite expensive to rent a flat or house with all the bills on top that actually people are staying in an HMO, as long as it is good quality, they wll stay there for quite a long time into their mid to late 20s as it’s a nice and affordable way of living with very litrle responsibility. Tenants now seem to have a little bit more money and perhaps a little bit more stability and looking for a better quality property than 20 years ago and its just a shift from more grotty shared houses to tenants demanding much better quality and are willing to pay for it.
In terms of the provision of properties, it has massively changed in terms of quality. 20 years ago everything was just pretty horrible and awful quality of accommodation. We were one of the first people really trying to give nice accommodation and making it a much more pleasant place to live and actually spending some money on the houses for the tenants and now most other landlords have started doing the same which is wonderful for the market. Tenants get better properties and landlords get better tenants.
- Have you seen an increase or decrease in the number of investors looking for HMOs in Hereford?
Well, you might think you know what the answer is but I have actually see some people wanting to get out of the business and some people wanting to get into the business. I think there are now fewer people doing more properties. The number of HMOs hasn’t risen that much as the older grottier ones are no longer in existence and then there are newer better quality ones being converted and other older ones being upgraded. I get a lot of people asking me about it but not very many actually taking up the mantel as it is a lot of work, yes, an excellent return, but an awful lot of work so not everyone wants to have that work load for the returns. Some people will want to employee a professional team like Relocation PA to take away all that hard work and help them and still benefit from the great returns but others just want to do it themselfes. People get very excited because of the good returns but they must weigh that up against the cost of time management but that’s where Relocation PA comes in now whereas before there wasn’t any other agents wanting to take on HMOs because of all the work involved so that’s something else that has changed recently. So with someone like Relocation PA, we might see an increase of people now getting into the HMO market.
- What are your views on the letting market in Hereford and more specifically the HMO lettings market?
Ok so the lettings market as a whole in Hereford is excellent and very buoyant and busy. On the rooms side of things, its very difficult to describe distinctly as in my HMOs we have many rooms that are let with a one day void period while we have a change over from one tenant to the next an then we have other rooms that are taking a little bit longer. Its very much dependent on the time of year o you have the point where everyone is coming out of university and coming back to live and settle so you get a big influx at that time of year and then vice versa when moving away from Hereford so it’s a little bit time sensitive. The size of the bedroom also makes a difference in how quickly it is let, the bigger rooms and the more facilities like en-suite or parking or both, then the room will fly off but things that are more limited on facilities or smaller size room is going to take a little bit longer.
- What impact do you feel the new University will have on the HMO market?
A lot of people are talking about the impact of the new university is going to have but I don’t feel it will make much of a difference to the current HMO market as one of the parts of the ethos of the university is that it will be all on campus and everyone will live on campus so no one will be looking for HMO accommodation and your typical student property in the private sector in Hereford. However, once people have finished at university, they might go back to where they came from originally, some will go to a new job somewhere else but the hope is that many of them will stay locally and therefore may well need shared accommodation as cost of living is so high now days straight out of university. Also the university will start even before it is officially open as they may well have a trial year and so students may well be looking for accommodation at some point prior to that, so there might be a couple of years of a little bit of a boost but not in the long term.
- What do you think the future of the HMO market is like in Hereford? Are you worried about it or feeling confident about it?
I feel increasingly more of the millennial generation are very transient and not want to be tied down. They don’t want to take on a long-term rental, they are not settling down with partners quite as early and they are preferring in general a more communal way of living and a relatively cheap way opposed to if they were by themselves. So I think HMOs have a place that will continue to develop and grow however I don’t think the HMO market will explode in terms on numbers of tenants wanting shared accommodation in the future but I do think people will stay in the same house longer to the turnover of rooms will be lower which is only a good thing as it causes less disruption to the house dynamics and continuity of the house for everyone living there and making it a much more pleasant experience and also better for landlords as they won’t have the cost of re- letting all the time.
- Are you worried at all about saturation levels in Herefords HMO sector for rooms with a clear infux of more HMO landlords over the last year?
We personally have now stopped investing in HMOs and have actually converted a few of our smaller ones back into single lets due to the size and number of rooms and the returns weren’t good enough for the work required. I do think it slightly depends on how much time you are willing to give it as we are now running three other businesses and doing a lot more development. The more time you spend letting, the easier it will be. We personally have done a little bit of a shift into different types of property like flats and conversions but our HMOs are running very well and we don’t seem to have any issues letting them at the moment.
I think the new people who are coming into the market either does them for a very short period od time as they come in and they hate it and then get out of it quite quickly or they will stay in it for 20 years which is a good thing as we would much rather see more professional landlords staying in and doing a good job.
I think it has got to a point of saturation but it hasn’t had a particular impact on us. I think the people who haven’t invested in their properties will get out as they don’t want to spend the money or they will reinvest and bring the property back up to the level of quality it needs to be and get back to where they were.
- How are you finding your room rents currently?
Personally, we have traditionally has slightly lower room rents but we are now upping the rent each time a room becomes available and actually occasionally when a tenant is in situ, particularly if we have done some improvements to the property. I think you have a duty to invest in your property but then you should be able to charge an appropriate rent to recoup that investment into improving the property for the tenants. What I see from other HMO landlords is rents are going up but mostly in accordance with what facilities are being offered. Better properties are being offered and so you have to pay more for them.
- Do you think people should be getting into the HMO market in Hereford?
I always give people my opinion on both sides, the good and the bad and then let them make their own mind up about it. I wouldn’t like to encourage or discourage but I will happily answer any questions about it. I personally think buying a new rental property now, with the additional stamp duty and mortgage interest rate relief going is not as an attractive proposition as it may have been previously. I think it is certainly putting some people out of the market and I think certain investors some April next year and they see their tax liability go up are going to think about getting out so there may well be some changes in the market over the next couple of years in response to those. I think that’s all I can same about it.
End of Interview
A big thank you to Joanna for taking the time to do this interview and if anyone is looking to buy or rent property in Hereford, go over to Cobb Amos and check them out at www.cobbamos.com.
If you are reading this and thinking about getting into the HMO market, like the idea of the big returns achievable but don’t want all the hard work as Joanna mentioned about managing an HMO or currently own an HMO and are fed up of the hard work, then Relocation PA can care of all every aspect of running and managing an HMO from letting your rooms to dealing with all maintenance issues as we specialise in HMO lettings for landlords in Hereford so you don’t need to worry about anything and can sit back and enjoy the money pouring in each month. Find out more about Relocation PA at www.relocation-pa.co.uk.