Typically, HMOs are let to single people or couples on a low income, or to people who don’t anticipate staying in the same place for a long time. People who don’t want to put down roots in an area.
As the second largest city in the North West of England (faint praise, we know), Liverpool has plenty of people who need high quality housing units on a short term basis. In short, students.
Home to the Victorian era redbrick University of Liverpool, the upgraded polytechnic – Liverpool John Moores University, and the ecumenical Liverpool Hope University,Liverpool also has drama institutions, community colleges, and several other higher education institutions offering degrees and other post-secondary qualifications.
In total, there are around 50,000 students in the city. That’s more people than live in Staines – and while some accommodation is provided by the institutions, most will be searching for ‘shared housing.’
In addition, thanks to the freedom of movement granted to the UK as part of our EU membership, Liverpool has a moderately high population of Eastern European workers, many of whom stay in low cost accommodation and send money home. Often, you can let HMOs to entire groups of workers who want to keep their outgoings low while they’re in the country.
If you’re looking to carve yourself a piece of the student pie, you’ll want your properties to be located close to the main university campuses. However, property near the centre of Liverpool is not cheap, as investors who have been priced out of London by foreign investors are driving up prices in popular areas of Liverpool too.
Local expert Vicki Peers of VM Property Solutions told rent.works, “What I’ve seen is that there are pockets in Liverpool, such as the L6, L7 and L15 postcodes which are where the students really want to be, and that’s where landlords buy to let out as an HMO.”
While the L6 and L7 postcodes are close to the city centre, they stretch backwards for up to two miles. The L15 postcode encompasses the Wavertree area, and the extremes are more than an hour’s walk away from the university.
Obviously, the further away from the centre your property is, the lower the demand will be. If you’re planning to buy more than a 20 minute walk away from the main campuses, make sure you check out the bus routes.
How much and how many?
Ideal HMO properties are easy to come by in areas desirable to students. But larger houses with more than five bedrooms can go for as much as £750,000.
Vicki advises investors to spend their money wisely.
“A typical investor has between £50,000 and £100,000 and is looking for houses to let out as HMOs,” she says. If they’re sensible, they’ll put £50,000 down as a deposit to get one or even two houses. You get a three bedroom terrace in L6 for £85,000 and you can let that out to four people for £85 per week. That’s £20,000 per year.
Should I do it?
HMOs are a hot item and an good way to start making money quickly. But Vicki warns against plunging headfirst into the market.
“There is a lot of risk with investing in HMOs,” she warns. “And just because everyone else is doing it doesn’t mean that you should. In addition, it’s a huge headache having to deal with five tenants. In my opinion, long term single lets are the way to go. They’re your bread and butter.