How to position your North London HMO for students and professional renters

Research from Paragon Bank recently found that 92% of landlords actively prepare or present their HMOs to attract a particular type of tenant.

Students were the most commonly targeted group, followed by working professionals and young single renters, and that targeted approach is now influencing everything from the properties landlords choose to buy to the improvements they make once they own them.

We have spoken about this before in our guide to attracting the right tenant in North London, because one of the most important parts of any letting strategy is understanding exactly who your property is for.

It is often quite easy to separate a family home from something designed for a professional couple or a double-income household. But there are also different groups sitting within the sharers market, and a student HMO is not necessarily going to need the same things as a house aimed at working professionals.

That distinction matters, because the right property, positioned towards the right renter, can perform very differently from one that has simply been furnished and placed on the market without much thought about who is actually going to live there.

Why are we talking about this now?

There has been a lot of conversation around rising rents since the Renters’ Rights Act came into effect.

Goodlord reported a significant increase in rents during June, with its CEO suggesting that one possible explanation could be the change to how often landlords can increase rents during a tenancy.

With rents now only able to be reviewed once a year through Section 13, and bidding above the advertised rent no longer part of the process, some landlords may be choosing to start new tenancies at a higher and more realistic level from day one.

It is too early to know whether that was simply a one-off adjustment or the beginning of a longer-term shift, but affordability is already shaping the choices renters make across London.

For students and younger professionals who still need to stay close to university, work and reliable transport, sharing is often the most realistic way to do that.

That is particularly relevant across North London, where areas such as Islington, King’s Cross and Swiss Cottage offer quick access to major employment hubs, universities and transport connections, including UCL and King’s Cross St Pancras.

The sharers market is not new here, and neither is the HMO strategy. But as rents continue to rise, it is likely to remain a major part of how people choose to live in London.

Why landlords choose the HMO route

For the right property, an HMO can offer a stronger rental return than letting the same home to one family.

Our Lettings Director, Khan, estimates that a well-positioned HMO can achieve around 10% to 15% more in rental value than a family let, depending on the location, condition, layout and tenant market.

There is also a consistency to sharer demand that can be attractive to landlords.

Families tend to move during clearer windows, often shaped by schools, work changes and the natural rhythms of the year. The student and professional sharer markets can provide a wider stream of demand, with new students arriving, graduates staying in London and working professionals moving between areas throughout the year.

That does not mean every larger home should automatically become an HMO. It means that where the location and layout already suit sharers, it can be a commercially strong strategy.

The important part is making sure the property is built around the tenant group you actually want to attract.

What students are usually looking for

Students are not generally looking for the highest-specification finish in the market. Their priorities are usually much more practical.

They want a home that is affordable, convenient, easy to move into and close enough to university or transport that their day-to-day life works.

For most student renters, furnished accommodation is still the expectation. Khan estimates that around 95% of students will be looking for a property that is already furnished, so this is not necessarily the place for expensive or overly individual pieces.

Solid, neutral furniture that can handle regular use and future tenant changes is usually the more sensible investment.

A strong student HMO will often include:

• fully furnished bedrooms and communal areas
• neutral, durable furniture
• reliable, fast broadband
• a separate washing machine and tumble dryer where space allows
• bedrooms that are reasonably similar in size
• practical communal space
• good access to a station, university or bus route

Similar-sized bedrooms are particularly useful in student houses because they can make it easier for the group to divide the rent and avoid arguments over who ends up with the smallest room.

A separate washer and dryer can also make a real difference in a household where several people are sharing the facilities.

We attended the UCL Housing Fair earlier this year, so we have had plenty of direct conversations with students about what they are looking for. In most cases, it is not a luxury kitchen or an overly designed interior that wins them over.

It is convenience, value and a property that does what it says on the tin.

Working professionals tend to want a little more from the home

Working professionals often approach shared living differently.

They may be a little older, working hybrid schedules and planning to remain in London for longer. They still want the affordability that comes with sharing, but they often want the property itself to feel more like a home.

This is where North London’s larger period properties can work particularly well.

You will often see professional sharers drawn to homes with attractive living rooms, good-sized kitchens, gardens and communal spaces where the household can actually spend time together. They may not want to pay the full cost of renting an entire house alone, but they still want the experience of living in one.

For professional sharers, priorities are more likely to include:

• a well-presented kitchen and bathroom
• comfortable and attractive communal areas
• larger bedrooms
• good storage
• space to work from home
• reliable broadband
• access to transport and employment hubs
• ensuite bedrooms where possible

Ensuite facilities can be particularly appealing to this group because, understandably, privacy often becomes more important as renters get older.

That does not mean every bedroom needs its own bathroom, or that a landlord should compromise the entire layout to create one. But where the space allows it, it can help the property stand out and may support a stronger rental figure.

Some features now matter across the whole sharers market

Although students and professional sharers have different priorities, there are several features that matter to almost everyone.

Paragon’s research found that demand was increasing for faster broadband, cited by 40% of landlords, ensuite facilities at 39%, inclusive bills at 33% and improved energy efficiency at 23%.

That makes sense.

Good broadband is no longer a nice extra when students are studying online and professionals may be working from home several days a week.

Inclusive bills can make budgeting easier, particularly for students and younger renters sharing with people they may not have lived with before.

Energy performance is becoming more important too, especially as renters become more conscious of monthly costs and how expensive a poorly insulated home can be to heat.

We have written separately about improving energy efficiency in a rental property, and it is worth reading before carrying out work, particularly if you are trying to decide which improvements will make the biggest difference to both tenants and the long-term property.

Make the property work for the tenant, but do not lose sight of the investment

There is an important balance here.

A landlord may be able to increase the rent by adapting a property more heavily for HMO use, but those changes still need to make sense for the property in the long term.

Turning every available space into another bedroom, removing too much communal space or changing the layout in a way that only works for sharers could affect the home’s future appeal if the landlord later decides to sell.

The same applies to expensive finishes. It does not always make sense to spend heavily on a student property if those choices are unlikely to create a meaningful increase in rent or attract a different quality of tenant.

The best improvements are usually the ones that solve a real problem for the renter without narrowing the landlord’s options later.

That is why the conversation should not simply be, “How can I get another room into this property?”

It should be, “Who is most likely to rent this home, what will they value, and will these changes still make sense for me in five or ten years?”

The right product, for the right person

We have said it many times, but it remains one of the most important parts of letting a property well.

If you have the right product, presented to the right tenant group and priced in line with what that audience values, renters are often prepared to pay more for it. For a student, that may mean furniture, convenience, broadband and a manageable monthly cost. For a professional sharer, it may mean attractive communal spaces, larger bedrooms, privacy and a home that feels comfortable enough to stay in for longer.

Neither tenant group is better than the other. They simply want different things, and the property needs to reflect that.

Our lettings teams speak to students and professional sharers every day, so we have a clear picture of what is generating interest across North London and which improvements are actually worth making.

If you are considering converting a property into an HMO, reviewing the performance of an existing one or deciding whether your home is better suited to students or working professionals, speak to Khan and our lettings team. We can look at the location, layout and local demand, and help you build a strategy around the people most likely to rent it.