HMO Strategy - October 2024
Welcome to the October edition of HMO Strategy. As the Renters Rights bill starts to make it's way through the readings and committee, landlords and agents around the country are looking at how they can further up their game to turn challenges in to gain. Remember: Whilst there is demand, there is opportunity.. for those who stay ahead of the crowd.
Market Trends: October 2024
Alex Babouris, winner of 5 awards at HMO Awards 2024, gives his view on the current market.
As we approach the end of 2024, the UK HMO market continues to experience significant shifts, both in terms of market sentiment and regulatory changes. One of the most defining trends this year is the impact of the proposed Renters’ Rights Bill, which amongst many things is set to abolish Section 21 “no-fault” evictions. The proposed legislation has sent ripples through the landlord community, particularly legacy landlords, many of whom are choosing to exit the market in anticipation of more stringent regulations. As these seasoned landlords divest, we’re witnessing the rise of a new generation of investors, driven by aspirations to modernise and improve the rental sector, particularly in cities like Cambridge. This is where we see the market going. Long gone are the days of ‘Rising Damp’ style bedsits. The future is high octane co-living.
Tenant Demand
Tenant demand remains at record highs, outpacing supply across the country, with Cambridge as a prime example. According to the Royal Institution of Chartered Surveyors (RICS), tenant demand nationally saw a net balance of +33, reflecting strong interest in rental properties For example, in Cambridge, the university city dynamic intensifies this demand, as students and professionals alike seek quality, well-managed housing. Yet, landlord instructions continue to fall, with a net balance of -18, indicating fewer properties are being put on the market. This imbalance is contributing to rent increases, which have climbed by an average of 10% year-on-year.
Landlords
For landlords, the ever-changing regulatory landscape poses both challenges and opportunities. Rising operational costs, due in part to the proposed increased energy efficiency standards for 2028, have been a point of concern. However, newer landlords entering the market are embracing these regulations, using them as a way to future-proof their portfolios. At Babouris, we’ve seen a surge of interest from landlords eager to upgrade their properties to meet new EPC Level-C standards, turning what could be seen as a hurdle into a competitive advantage.
Management
From a management perspective, we’ve adapted to these changes by streamlining processes, such as adopting digital tools for maintenance tracking/paired with sustainable suggestions and community engagement. This efficiency is key as we continue to attract both new landlords and high-quality tenants, despite the national challenges many agents face. While staffing shortages and the need for quicker maintenance responses remain a broader industry issue, our proactive approach—backed by a trusted network of contractors—keeps us ahead of the curve in Cambridge.?
As the market evolves, we believe that the future of HMOs is bright. The departure of legacy landlords creates space for a new wave of investors with fresh ideas and a commitment to delivering high-quality, compliant housing. For those willing to embrace the changes ahead, the potential for growth remains significant.
Alex Babouris
5-time award winning founder of Babouris Living, Cambridge's leading HMO Agency
Renters' Rights Bill progresses to committee stage
The Renters' Rights Bill, now in committee stage after its Second Reading on October 9, brings substantial changes for HMO landlords and property investors, with a Commons return expected by November 28. One of the most notable shifts is the move to periodic tenancies for all new and existing rentals, eliminating fixed-term agreements. This change mandates a standard two-month notice period for tenancy termination, which could impact planning and turnover. Additionally, the removal of Section 21 “no-fault” evictions means landlords will face challenges when attempting to remove antisocial tenants, as they will need to rely on specific legal grounds for possession, making effective tenant management more critical.
Other key provisions include the introduction of improvements to the Decent Homes Standard, requiring higher standards for property quality and safety, which may necessitate updates for existing HMO properties. The Bill also bans rent bidding, ensuring tenants are not charged above the advertised rental rate. Importantly, landlords will no longer be allowed to exclude tenants on benefits, even if mortgage or insurance policies previously required this.
These changes put further importance on ensuring you have the right tenants, and meticulous processes in place.
COHO launches "Innovation Fest 2024"
COHO , property management software for agents and landlords, has announced their new COHO Innovation Fest to run from 16th October to 28th October. The announcement, on their Discord community channel, says that there will be new and exciting features released every day,? showcasing that COHO "never stop building awesome stuff".
Innovation Fest Day 1 introduced a new automation in the form of "Trusted Suppliers", where the maintenance workflow will automatically accept scheduled dates, invoices, and completed work based on your own settings.
Leadership Change at Arthur Online: Rajeev Nayyar Steps Down
Arthur Online, part of the Aareon UK portfolio, is experiencing a shift in leadership as Rajeev Nayyar prepares to step down later this year. Nayyar initially took over following the departure of Arthur’s original founder, Marc Trup, who brought a deep passion for property management software to the business before its acquisition by Aareon. Since then, Nayyar has guided Arthur Online as it became part of Aareon’s wider strategy in the UK property technology space.
The incoming leader has a background in business and digital transformation, having spent a decade at Accenture, where they focused on large-scale transformation projects. Business transformation, which often involves reshaping company structures, processes, and strategies to drive efficiency and scale, can bring a shift in focus.
As Arthur Online enters this new chapter, it remains to be seen how the platform’s role within the UK property management market will evolve under its latest leadership direction.
Other News
Council to restrict HMOs despite 'no evidence' residents cause crime - LandlordZone
Tighter rules approved for city's 'excessive' HMOs - BBC News
London landlord fined ￡50k for renting out dilapidated HMO - PropertyWire
领英推荐
HMO Network Members Day
8th November 2024, 10am - 4pm, Bristol
HMO Network will be having their annual members day in November, bringing together dozens of agents around the country to share their experiences, network, and see presentations from top speakers.
The event is open to HMO Network agents only, but if you're interested in signing up then visit their website.
Future Proof your HMO Business
In this pioneering talk, Williams Johnson - the co-founder of the multi-award winning coliving brand and management company B-Hive Living, will unveil the?key market trends shaping the UK rental market in 2024 and beyond and the strategies and technologies they’ve used to build?their unique customer experience, achieve?superior?rents and?future-proof their property portfolio,?earning the accolade of the best and most?innovative?shared-living customer experience in the UK and the world along the way.
The Renters Rights Bill - More than Sec 21 being abolished
by Des Taylor - Landlord Licensing & Defence
Enforcement
The Renters Rights Act 2025 is going to bring enforcement by the local housing authority of matters that are currently only enforceable by prosecution in the magistrates court. This will bring about financial penalties against landlords and agents and those who do rent to rent for their failings to be compliant and their failings in tenancy administration. The burdens of proof will still be the same but landlords will need to make sure they are fully compliant in order to avoid enforcement.
Compliance
The cost of compliance will never exceed the cost of enforcement. Investing in training of the boring administration and process and procedure will be more vital now than ever before. Systems and processes and software will be vital along with notification tools for renewals of certifications and licences. In comparison to many of the other matters in the Renters Rights Bill this will be a greater overhead for landlords and letting agents then the seeking of possession or the removal of the fixed term tenancy.
Training
Training is absolutely vital and some key compliance and enforcement defence teams are working currently to collaborate with those in the property education sector to provide the plugins to their services so that all property learning will be comprehensive and address compliance.?
Landlord Licensing and Defence assists landlords and agents in this area before enforcement by preparing them and working with partners to set up systems and for some who have not got it right, we help in their defence to minimise the damage and stop them from self-incriminating. Confidential Free Diagnosis Call on 0208 088 3400 or https://landlordsdefence.co.uk/10-minute-diagnosis-call/
Des Taylor, Casework Director Landlord Licensing & Defence
HMO Mastermind Debrief
by John Paul
John was the founder and CEO of the Castledene Group, which grew to managing 2,500 properties. John also sits on the board of ARLA and main board of Propertymark, as well as being a well respected industry coach.
The beginning of October saw another mastermind with lots of great agents from all over the UK. We welcomed some new faces, from around the HMO scene, some of which you may recognise from the photo.?
We discussed things from recruitment to commission structures, which is always a hot topic, how to remunerate your team.
The main content session as around financial management. Do you have your P&Ls in place? Do you look at them, are you trying to effect change and how? What are you doing to move the needle? Always a great conversation to have as it is so relevant. How can you scale and grow a business if you don’t know your numbers. It tied in nicely with the commission conversation also, as you can’t pay out for commission if you don’t have the accurate figures. Also, and this can sometimes can be controversial, do you share your turnover with your team. I’ve always said “Most certainly". If you are asking them to hit certain figures for you to make a profit, then if you don’t share with them the results, it's hard to build trust.
If you think your agency can benefit from being involved in a mastermind, get in touch with John Paul today at [email protected]. Mention HMO Strategy for a small discount.
Get Involved!?
If you'd like to contribute any content or news, please write an email to [email protected]
Founder of Babouris Real Estate and Babouris Living | Multi Award-Winning Leader in Co-living and HMO Management | 1,000 Rooms and Counting | Expert in Cambridge Property Investment | Zoopla Lettings Advisory Board
1 个月Great to see so much interest in the future of co-living and HMOs! We’re at an exciting tipping point where those who embrace change can thrive, especially with the Renters’ Rights Bill shaking things up. The move away from old-school rentals to high-quality, community-focused spaces is long overdue. It’s the way the market is moving and the market wants it—renters get a better lifestyle and landlords unlock new potential. Let’s face it: the future of renting is a lot more exciting when you’re building homes that people actually want to live in! Thanks Vann Vogstad for the opportunity to write the intro to this great publication. I hope the readers enjoy my take on the state of the market!