What happened in the HMO property market in Q1 2023?
Data from SpareRoom, the room rental platform, revealed that rents across the HMO property market had reached an all-time high in Q4 2022.
In addition, the UK average room rent increased 13% year-on-year.
Supply & Demand
The demand for rental properties peaked between summer and autumn whilst supply dropped to a nine-year low. The statistics show that there were just 34,085 rooms available to rent, and 245,351 renters looking for a property.
Whilst the figures have calmed since then, the supply/demand dynamic is still very much unbalanced, with demand growing, and far outweighing supply and the number of available rooms decreasing.
Regional Performance
SpareRoom’s statistics showed that in Greater London, the average cost to rent a room surpassed £900 PCM for the first time ever in September 2022, this figure has only increased, and just 3 months later, in December, the average rent reached £949 PCM.
Looking at the data from Q4 2022 to Q4 2021, all UK regions had seen an increase in room rents except Scotland and Wales.
London saw the largest increase in room rents with a 22% rise. The South East, East Anglia, North West and East, and Northern Ireland all saw strong rental price growth, ranging from 15% to 18%.
Q1 2023
Compared to 2021-2022, average room rents in Q1 2023 rose by 10% or more, the same is true for almost every one of the top 50 towns and cities in the country.
The average rent across the UK is at an all-time high, and in the capital, there isn’t a single postcode with an average monthly room rent under £700.
The top-performing regions with the highest annual rent increase from Q1 2022 to Q1 2023 are:
London – 20% increase
North East & North West – 16% increase
South East – 15% increase
What are tenants looking for in an HMO?
A report conducted by Paragon Bank in 2022 found the most attractive features of an HMO property to tenants, here are the 7 most attractive features of an HMO property:
High-speed broadband
55.8% of surveyed HMO landlords said that they had seen an increase in demand for a good internet connection to accommodate quality of life and the ability to work from home.
Rooms with ensuite bathrooms
52.8% of respondents said that tenants were looking for an ensuite bathroom and were happy to pay more rent to secure one.
Large rooms
39.1% of landlords said that they had seen an increase in interest for double rooms, as well as larger singles.
Quality furnishings
39.1% said that more and more tenants were interested in properties with higher-quality furnishings, many landlords have reported that more tenants were looking for more long-term tenancies and so high-quality furnishings are highly sought-after.
Office furnishings
34.8%. Alongside the increased interest in long-term tenancies, more tenants are looking for spaces for working from home and furniture that will accommodate this lifestyle.
Communal space
30.4% of surveyed HMO landlords said that they had seen many tenants looking for communal space. In line with the increase in tenant interest in longer-term housing, many are looking for a home with more recreational space.
Outdoor areas
27.7%. In addition to the demand for communal space, more tenants are seeking properties with outdoor spaces and gardens.
With these 7 most desirable features of HMO properties in mind, it is clear that more tenants are viewing HMO accommodation as a high-quality and longer-term option for housing, especially in areas near city centres, train stations, educational institutions, and airports.
If you are looking to attract more long-term tenants to your HMO property, see our article for tips on how to attract more long-term HMO tenants.
Interested in what HMO property can do for you? Speak to us today and begin your HMO journey.
