Making the right investment option between single let or multi-let or HMO is always a tricky decision opens HMO Property Designs . Considering the hype of houses of multiple occupation (HMOs), many investors get confused that whether they should offer single let or let rooms separately to multiple tenants. Therefore, we will provide you with the pros and cons of both so that you can make a wise call.
Single Let Property
In a single let, there is one tenancy which means an individual, family, or couple. In it, you will let the property with one Assured Short Term Tenancy Agreement (AST). As a landlord, you will be responsible for looking after the place’s maintenance and insurance to keep it in good condition.
The rest of the payments like utility bills like internet services, gas, water, electric, and council tax are paid by the tenant. Here are the pros and cons of letting single units.
Pros Of Single Let Property
Such properties are easier to manage as there are one tenancy and not much hassle. If you want a simpler investment, this is the option for you. You can manage a single let property yourself without hiring a Letting agent. It will save you from paying a monthly fee of 10% of your monthly rental income. By giving the property to a single tenant, you can get long-term capital growth of the property.
Cons Of Single Let Property
Due to increased taxation, landlords want to mitigate these costs, which is not possible through single unit lets. As in such properties, the ROI or annual return on investment is relatively less, i.e., around 6%. Moreover, such properties have longer void periods, and with single tenancy, these have lesser rental yields.
HMO Or Multi Let Property
These usually are larger than single let places as three or more tenants’ live under one roof. All tenants except some must have separate bedrooms; there is also an en suite installed in some rooms. The utility bills are paid by the landlord, so the tenants don’t have to worry about that.
Moreover, each tenant pays a separate rent and may have shared facilities, e.g., bathroom, communal living room, and kitchen. For tenants, it is more favorable to live in HMOs as they have to make only one-time payments, and the rest is assured by the landlords, e.g., insurance, bill payments, and maintenance.
Pros Of HMOs
The biggest advantage of letting individual rooms is multiple tenancies which means more return on investment. If one tenant moves out, you still have the rest of the rooms rented, which means fewer void periods. There is a high demand for such renting properties among students and professionals, creating higher returns.
Cons Of HMOs
With multiple tenants, you have to look after the demand of each separately. Therefore hiring a good letting agent is necessary. But with the emergence of new companies such as HMO Property Designs, you can overcome this challenge. Still, you have to get a license, registration, and do lots of paperwork to make your property an HMO.
HMO VS Single Let
We have analyzed the pros and cons of both renting property types. Those who want to stay away from all the hassle, management, and chaos should stick to single let property investment. However, for those who prefer to get more profits with no void periods, HMO is definitely the best option. Though it would require more start-up costs, in the longer run, it is worth the investment.