Hello and welcome. The next question we’ve
had that’s come in is regarding communal spaces, and essentially providing lounges
in communal areas for tenants in HMOs, and whether you should or you shouldn’t kind of
do that. We’ll look at covering that in this video for you today. The question on whether to provide a communal
lounge in a property for HMO tenants, does tend to get quite a lot of interest in HMO
circles with people on both sides of the fence. You get a lot of investors, very large HMO
investors, they’ve got a number of properties, they’ve been doing it for a number of years,
that don’t provide communal lounges. They might give a very large kind of kitchen space
and that will be the communal area for the tenants in that property but they don’t tend
to have one central lounge for tenants. There’s a number of reasons why they tend to do that
and partly it’s because they want to increase the amount of bedrooms in the property.
By using that lounge space as a bedroom instead obviously rapidly increases the potential
on-paper returns that that property can deliver. However, there’s another significant side
of that coin, which is investors that want to provide very nice, comfortable long-term
living space for their tenants, and ultimately have a property that’s going to have very
low tenant turnover. Personally we’ve found that the properties that have communal spaces
tend to fit that bill the best. Because if you’re in a property from a tenant’s point
of view, if you view it from their side of things, they’re renting in a new area or new
property they’ve just moved in and there’s no kind of social area, there’s no lounge
area, people do tend to be very fragmented and very separated. You tend to get higher
turnover of tenants in that respect. People live in their rooms and it’s not really the
kind of nice environment that you’ll see in a lot of typical HMO spaces where they do
have shared accommodation. It is quite a wide difference in terms of where we’ve seen, from
a personal perspective, the tenant profile it will typically attract on that basis. If we’re not providing communal lounges, that
generally leads us to a different end of the working-tenant market, or it leads to local
housing allowance or social housing type properties. However, when you do provide a nice kind of
communal area, a nice living space, it attracts a lot wider group of professional
tenants, you get a much lower tenant turnover and you also get better tenants quality. As
we said, a different tenant profile in terms of a different scope of the tenant or working
professional tenant market. If you can provide that communal living space it’s well worth
doing so. In terms of sizes, ideally you want something
around 10 square meters and above, and that gives people enough space to obviously have
a small dining table, sofas, TV area, all that kind of good stuff that you’d usually
have in a communal space like that. Hopefully that helps answer the question. It gives a
bit of an insight in terms of where we typically look at providing our HMOs and we’ve done
both in the past. We’ve had HMOs without any communal living space. Certainly now and going
forward we favour providing those lounges, those communal spaces for tenants because
ultimately we see over the very long term, when you’re looking at providing a service
to clients, and tenants are going to be your clients, they’re going to have competition
and they’re going to be able to go out there and look at a number of different rooms available
to let. Ultimately we want ours to let first, and to the best tenants and also for the longest
time frame, and at the highest rates as well. That’s where we see providing a communal lounge.
It gives us kind of that benefits, over and above potential competition in the area. Hopefully
that helps. Thank you for watching this video. If you
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