For property investors looking to maximise their investments, Essex has consistently been a top choice for HMOs (Houses in Multiple Occupations).
Essex is an ideal location for HMO investments due to its affordable property prices, strong tenant demand from students and professionals, excellent transport links to London, and high rental yields. With diverse housing options and a growing economy, it offers landlords excellent potential for returns.
Read on for Goldmanread’s guide for aspiring HMO landlords in Essex. For one-to-one advice on getting a mortgage on your next HMO investment property, please get in touch.
Why Essex is a strong HMO investment location
As a mortgage broker based in Essex, we know there are plenty of reasons why HMO property investors are drawn to Essex. From affordable property prices to its appeal for tenants, this county has much to offer.
Affordable property prices
For HMO landlords, affordability is key – the lower the investment, the better the rental yield. Compared to high property prices in other parts of the South East, average house prices in Essex are more affordable. As an investor, this means it’s easier to find suitable properties for conversion into HMOs without overextending your budget.
Large student population
Essex is home to a significant student population thanks to its universities and colleges. Students are always on the lookout for affordable rental property, and HMOs are particularly appealing as they offer a cost-effective and sociable living arrangement. For landlords, this means a steady demand and a reliable tenant base year after year.
Growing economy
Essex benefits from its strong economic ties to London, making it a thriving area for property investment. With local employment opportunities on the rise and steady economic growth, there’s no shortage of tenant demand for buy-to-let and HMO properties.
Attractive to professionals
Many working professionals in Essex need access to reasonably priced but good quality houses, close to town/city centres or within easy commuting distance to London. Essex has all types of houses, many of which meet the needs of professionals, especially younger professionals who may just be starting out on their career paths.
Strong rental demand and yields
Essex’s combination of lower property prices and high tenant demand makes it a sweet spot for HMO landlords. Average monthly rent levels, when charged per room, can lead to impressive yields, making HMOs particularly appealing for investors looking to maximise their returns.
Great transport links
Essex is incredibly well-connected, with fast train lines, reliable bus routes, and parts of the London Underground serving the county. For tenants commuting to London or travelling within Essex, this ease of access is a major draw.
In addition, London Southend Airport offers both domestic and international routes. This connectivity makes HMO properties in Essex particularly attractive to professionals and students alike.
Areas in Essex to consider for HMO property investments
Essex has a diverse mix of towns, cities, rural areas, and coastal communities, offering something for every type of tenant and property investor.
When deciding where to invest in Essex, it’s important to study the housing market in each specific area. The housing market varies by location, so consider areas with affordable property prices, strong tenant demand, and good links to major hubs like London.
It’s also essential to consider the types of properties available and their suitability for HMO conversions, such as larger semi-detached houses or terraced houses.
Here are some key areas in Essex to consider:
Chelmsford: The county town of Essex, Chelmsford, was awarded city status in 2012. There is a direct train line to London and plenty of modern amenities, attracting young professionals and students.
Basildon: Affordable and close to the capital, Basildon is undergoing regeneration and attracting new residents and businesses. It’s a hotspot for young professionals looking for good value accommodation near London.
Southend-on-Sea: Southend blends city living with seaside charm. The presence of a university, a lively cultural scene and great transport links mean a steady stream of students and professionals looking for HMOs.
Colchester: Britain’s oldest recorded town, Colchester, is home to the University of Essex, so it has a large student population and great HMO potential.
Harlow: Close to the M11 and with a direct train line to London, Harlow is perfect for commuters. That, combined with affordable house prices, makes it an ideal spot for HMO investment.
Mortgages for HMO Properties in Essex
Getting the right mortgage for an HMO property can feel like a challenge, but it’s an essential part of making your investment work. Unlike standard buy-to-let mortgages, HMO mortgages are tailored for properties rented out to multiple tenants, and they come with a few extra considerations.
An HMO mortgage is specifically designed for properties rented out room by room, with tenants sharing facilities like kitchens or bathrooms. Because these properties carry a higher risk, are costlier to run and generate higher rental income, lenders often have stricter requirements.
What makes HMO mortgages different?
- Higher rental yield expectations: Lenders will want to see that the property’s rental income can easily cover the mortgage repayments, especially since HMOs typically involve more costs.
- Special valuations: Instead of valuing the property as a single unit, lenders may focus on the income it can generate from letting individual rooms.
- Landlord experience: Some lenders prefer working with investors with experience managing rental properties rather than first-time investors.
Navigating HMO mortgages can be tricky, but you don’t have to do it alone. At Goldmanread, we’ve built relationships with a wide range of specialist lenders to match you with the best options for your investment. Whether it’s your first HMO or another addition to your portfolio, we can guide you every step of the way.
Thinking of investing in an HMO property in Essex? Contact Goldmanread for mortgage advice
If you’re a landlord or first-time investor considering a buy-to-let property, it’s always worth speaking to experts before diving in. At Goldmanread, we specialise in securing HMO mortgagesand work with all the major lenders in the UK.
Whether you’re just starting out or expanding your portfolio, we can help you find the right financing for your next HMO property investment. Contact us today to get started.
Frequently asked questions about investing in HMOs in Essex
Do I need a license to run an HMO in Essex?
You will find that running an HMO in Essex is strictly regulated, and a licence is almost always required by the local authority. It’s essential to contact the local council to ask about licensing requirements before you commit to a property. It is also worth discussing your plans with a local letting agent before committing to a specific town or area within Essex.
Are there planning restrictions for HMOs in Essex?
In some cases, yes. If you’re planning to convert a property into an HMO, you’ll need to check with the local authority for any planning restrictions. This is especially important if you’re converting smaller properties, like two- or three-bedroom houses, into larger HMOs with five or more bedrooms. Planning requirements can vary significantly depending on the area.
Can I expect a sustainable rental income from an HMO?
Yes, one of the biggest advantages of HMOs is that the rent is charged per room, which means multiple income streams. For example, a five-bedroom HMO brings in five separate rents, so if one tenant moves out, you’re still earning from the others. While HMOs do require more hands-on management and maintenance, the higher rents and reliable tenant demand often make the extra effort worthwhile.
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