From some commentators, there seems to have been a suggestion this was always going to lead to a flood of purchases from landlords and would-be landlords alike, seeking to take advantage.
Amid such analysis there is almost the assumption that landlord buyers will simply spend the next six months hoovering up property without a care for who it might be suitable for, what type of home it is, or indeed, what yield it could deliver.
In that regard – and over two months since the holiday was announced – that has certainly not been the case.
Interestingly, we at Foundation saw a 46 per cent increase in buy-to-let purchase applications between July and August from non-portfolio landlords – those with three or fewer buy-to-lets.
But, they still tend to own investment properties already rather than being completely new to the sector.
Second, concerns such as tenant demand, quality, region and yield are always going to be high on their and our agenda.
When you are investing thousands of pounds, you want to feel like you have done your full research and completed your due diligence to get a property which not only works now, but has longevity, and also gives you the best chance of capital increases in the future.
Uptick in applications
That being the case, it’s no surprise to see landlords looking at potential houses in multiple occupation (HMOs) and multi-unit block investments in greater number, given they tend to deliver higher yield.
Q2 data from the BVA BDRC survey of landlords revealed that HMO properties topped the rental yield charts delivering 6.9 per cent yield compared to the overall figure of 5.8 per cent.
There are opportunities particularly in the six or less occupant HMO sector, which can be a successful stepping stone into this part of the sector, which might be particularly interesting for those who have never owned an HMO before.
Again, we’ve seen a noticeable uptick in applications for smaller or standard HMOs – up by 23 per cent in September compared to August.
Plus, even in the situation we currently find ourselves in regarding Covid-19, there is an expectation and anticipation that multi-tenant living is going to be required even more in the future, given where we are with ongoing housing supply levels and demographic changes.
There is of course a word of warning here – clearly, buying and running an HMO is not something to be taken lightly.
Advisers may well need to talk those landlord clients – especially those who do not currently own this type of property – through the greater level of requirements and responsibilities that come with them.
This should include the licensing requirements where the HMO is situated, the standards these properties must meet in room size, security, health and safety, access and exits, plus communal areas.
HMOs are a step up in liability.
For example, landlords found to have fallen short of licensing rules are being fined thousands by local authorities, who are under their own pressures to remove such housing from the region’s stock and scrutinise heavily HMO landlords to maintain their properties to the highest standards.
In the right hands, and with the right approach, landlords who want to diversify and maximise yield, while catering for more tenants, can find very strong investments in the smaller HMO space.
Advisers who can support and assist this diversification and can secure the right finance options, are sure to do well both now and in the future.