Are HMOs the answer to mortgage woes?

Houses in Multiple Occupation (HMOs) could solve mortgage woes by offering both tenants and landlords more lucrative opportunities

In a new survey on mortgages, around 50 per cent of first-time buyers said they expect to still be paying off their house purchase when they’re retired.

As well as viewing mortgages as long-term debts, the poll of 25-34 year olds also found that 27 per cent of individuals anticipate difficulty obtaining such a product in the first place.

Credit histories, income levels and age were all factors which those questioned felt might count against them when borrowing to purchase a home and left them expecting a lifetime of repayments.

Yet despite this low confidence, a possible remedy to mortgage woes could be found in HMOs which offer a more lucrative financial situation to both tenants and property owners.

Where do HMOs fit in?

According to data concerning the average deposit for a first-time buyer (£20,600), tenants who live in HMOs could secure the necessary funds much quicker than those who rent privately.

This could improve their chances of getting on the property ladder earlier in life and even help prevent a lifetime of mortgage repayments that extend well into retirement.

Platinum Property Partners, who made the calculations, said professional tenants can save around £308 per month in a house share compared to just £174 in a privately rented one bedroom flat.

This equates to a difference of 77 per cent and means HMO tenants could raise the necessary deposit to buy their own house four years earlier than private renters; 5.6 years over 9.9 years.

Steve Bolton, Platinum Property Partners’ Founder and Chairman, explained the benefits this has for tenants by stating that “living in an HMO is far more affordable than renting alone – and means HMO tenants have a realistic timeframe for saving up for future goals like a house deposit”.

Property investors and prospective HMO landlords could also stand to benefit by capitalising on this data; as HMOs offer better value to youngsters, investors who expand their portfolios with these types of properties could guarantee steady income from a regular influx of eager young tenants.

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