High inflation and rising mortgage costs are impacting all landlords, but HMO landlords are being hit particularly hard at the moment, for three key reasons.
Firstly, multi-occupancy properties tend to have greater ongoing maintenance and repair requirements, so the higher cost of labour and materials is magnified.
Secondly, most HMOs (that aren’t student homes shared by friends) consist of rooms let on an all-inclusive rent package, with the landlord paying energy and utility bills directly themselves.
Add to this the third reason: mortgage rate increases. Whilst some landlords have been able to raise rents each year, it's been impossible to pass on the whole increase in energy and mortgage costs, so landlords have had to absorb most of the additional expense.
If you’re a HMO landlord who’s feeling the financial squeeze at the moment, here are our top 7 tips on ways you might be able to reduce your costs:
- Speak to your tenants. Organise a house meeting with your tenants and explain that costs have increased significantly, but rather than putting their rent up by the full cost increase, you’re asking them to just keep more of an eye on their energy usage by doing things like:
- Keeping the heating at a lower temperature and turning down the radiators in their rooms when they’re out
- Not leaving electrical appliances and devices on stand-by – e.g. television and electric shower
- Switching off lights when they leave rooms
- Using eco-settings on the washing machine, tumble dryer and dishwasher
Often, a simple conversation is enough to change your tenants’ habits and they should appreciate the fact that you haven’t passed all the additional costs on to them!
- Consider switching energy provider. If you’ve been with the same energy company for several years, you may find there are cheaper tariffs with other providers. Visit sites like MoneySavingExpert.com for more information and advice about the options on offer or other comparison sites.
- Review the lighting. Switch all the lightbulbs to LED, as they use much less energy than standard bulbs and also last longer. Consider installing sensor lighting in communal areas, such as the hallway, landing and front porch, which is motion activated and avoids the issue of lights being left on.
- Install a smart heating control system. Smart thermostats let you control the heating remotely, so you can ensure tenants aren’t overheating the property. You can also zone the property and set parameters for communal areas, such as the living room and kitchen.
- Make laundry facilities coin-operated. Some HMO landlords have always had coin-operated washers and dryers in their properties, others think it’s a bit ‘penny pinching’! But with such high energy costs, it’s worth considering – and you can convert your existing appliances by fitting a coin box. Although there’s an up-front cost to that, you should recoup it through your tenants’ payments within six months, and then it’s simply a contribution to your electricity bill.
- Negotiate fixed labour costs for regular contractors and service providers. Speak to your cleaner, gardener and other regular contractors and try to agree a set price for the next 12 months. While it might not reduce your costs immediately, at least you have peace of mind that they won’t rise in the near future.
- Check you’ve got the most cost-effective insurance. HMOs require specialist insurance, which does cost more than landlord insurance for a single household let, but there is a choice of providers and you may be able to save money by getting multi-property or portfolio insurance that covers all your properties under one policy. Visit our sister company, Bode Insurance Solutions, to secure a competitive quote.
