Single let vs and HMO

by John Saunders
27th Sep 22 11:52 am

This article looks at the pros and cons of both a single let and a house of multiple occupancy (HMO), aiming to help property investors who are looking at a possible premises that they wish to rent out.

What’s the difference between a single let and an HMO?

A single let is a property, either a house or apartment, that you let out to one tenant. The tenant could either be a family or a sole individual and, once the contract is in place, you can leave them to their own devices.

As a landlord, you are still responsible for looking after the property, ensuring that everything is working order and taking care of any damage. However, the tenant is responsible for paying the bills – utility bills, internet, TV licence and council tax.

An HMO is normally a large house or apartment with three or more unrelated occupants living in the property, otherwise known as a house share. Each tenant has their own individual room but will often share the kitchen, bathroom and living room.

HMOs are often occupied by students or young professionals and represent a more cost-effective way to live if you’re on your own. The landlord typically pays for all of the bills, which is covered by the rent that the tenant pays, allowing for one easy monthly payment.

With either option, it’s important to consider landlord insurance which might protect your investment should anything happen, as well as the income that you receive from the property.

Pros and cons of an HMO

HMOs are desirable properties for those looking for cheaper accommodation. As a landlord, the financial benefits are a big advantage, providing a greater yield with multiple streams of income. They also come with less risk of the property being completely empty, removing the risk of a loss of income.

However, you do need an HMO license, which can be hard to obtain if you’re a new investor. There is also the possibility of having a high tenant turnover, as many young people live in an HMO only temporarily.

Pros and cons of a single let

Experienced investors typically opt for single-let properties. Having a single tenant is easier to manage and therefore a lot less time-consuming. You also won’t have to furnish the property, as this will be left to the tenant. Plus, they usually take care of all the utilities and bills, so you don’t have to worry about them.

However, having a tenant will result in some wear and tear to your property, which you’ll have to consider in your monthly costs. There is also the possibility of incurring void periods, and an empty house means that you’ll be responsible for the bills.

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