Surviving COVID-19 as an HMO Owner
Owning a House in Multiple Occupation (HMO) in the current climate comes with a range of issues and concerns. Your primary focus will need to be on keeping your business afloat and stable using the right steps and appropriate actions. Cashflow management has become a key factor in making sure HMOs can continue providing quality accommodation and homes for their many tenants.
Effective cash flow management is essential for any successful HMO but it has become even more important as the impact of Coronavirus takes hold. The individual income you make from each occupant needs to be effectively plotted and this is especially important now more tenants may not be able to keep up with their rent payments or may have agreed a reduced payment plan. Effective cashflow management and forecasting allows you to plan for a drop in income and how you can manage this yourself. It is useful whether you run a single or multiple HMOs.
Constructive Cashflow Management for HMO Success
Understanding how your income is decreasing will allow you to look at other aspects of your cashflow more effectively. You may be able to restructure other costs such a switching utilities bills to quarterly rather than monthly payments and you could consider cutting some direct debits as long as you have a long-term plan to deal with these costs. HMO landlords tend to be amongst the most cost-cautious out there, but the current crisis means it is even more important to focus in on cost cutting measures.
You will find many utilities companies and similar service providers are willing to be flexible with the uncertainty of current times. You may also be able to approach your bank for short-term funding and support. Your lender may offer you a mortgage holiday if its appropriate too, which may be beneficial to help keep working capital available.
Keep Tenant Communications Open
If you deal with your tenants directly then it’s important to keep in touch with them regularly so you all have an understanding of the situation and can manage expectations and the reality of late or missing payments. If you work with an agency you can do the same and check in to be sure they’re also working directly with tenants in a sensitive and proactive manner. You need to make sure than no rent is lost due to misunderstanding of the regulations in place. The changes do not allow all tenants to simply stop paying their rent and in fact, guidelines state tenants should continue to pay their rent to the best of their ability.
When you run HMOs the number of tenants you have significantly increases as they rent per room. However, with good management and effective communication it doesn’t need to become an even more fraught situation. Owners can plan for any loss in income and tenants are protected my the government scheme which ensures they cannot be evicted for the short-term. Tenants need to be made aware that any rent unpaid does need to be paid back at some point, as this misconception could lead to difficulty at a later time.
HMO owners may be worried about their loss of income but with proper cashflow management and open communication channels, you can easily work out whether to take advantage of government initiatives, mortgage holidays and other incentives, or whether it is better for your business to weather the storm.
To discuss more with our team of experts please just get in touch.