Feature: does Covid-19 spell the end of HMOs in Scotland?

By Stephanie Taylor, Co-Founder of HMO Heaven and Rent 2 Rent Success

With coronavirus and a recession on the horizon some are saying that it’s the end of the road for HMOs (Houses of Multiple Occupancy, also known as house shares). 

But I don’t believe that’s the case, in fact, there is good evidence that the opposite is true. Here’s why:

Myth 1 – no one will want to house share after coronavirus

Although this may seem like common sense, it’s not quite that clear-cut.  In our experience, even during the current pandemic, people are continuing to choose to move into HMOs.

Most of our young professional housemates that I rent to could easily afford a one-bedroom flat, but they tell me they’d prefer to live in a house share for these main reasons:

i. To meet people
Often people are moving to a new city for work and don’t know anyone and therefore prefer to live, at least initially, with other like-minded people rather than live alone. House shares are a great way to meet people and make friends and have a ready-made social life.

ii. For affordability
Often people are saving to buy their own home and love the affordability of HMOs because they can save more each month than they would if they rented on their own.

iii. For convenience
It’s the ease of moving in and having everything set up already; furniture, white goods, all bills included, internet etc., and fast service if anything goes wrong.

iv. For flexibility
We live in a much more mobile society than ever before. Many people move around the country for work, whether it’s to find a better job, or within their existing position. So being tied to a place isn’t very appealing. HMOs make it easy for them to commit for short periods only.

All in all, we’re seeing the demand for HMOs increasing, not decreasing. 

Myth 2 – HMO demand will plummet in a recession

If we are heading for the market dip many financial commentators are forecasting, then it’s likely demand for HMOs will grow, as past evidence has shown that residential rental demand increases in recessions. More people prefer to rent rather than buy in recessions.

Research by the Royal Institute of Chartered Surveyors (RICS) showed that following the 2008 recession there was a continued rise in tenant demand.[1] 

So, although many people state, as though it’s a universally accepted fact, that getting into rental in a recession is bad, they are wrong. Recessions see growing demand for rental property and especially affordable rental property, such as HMOs.

Myth 3 – the HMO market is saturated

There is a shortfall in affordable housing. A National Housing Federation and Crisis report conducted by Heriot-Watt University reveals that the UK needs to build 340,000 new homes every year until 2031 to meet housing demand. And at least 145,000 of those homes need to be what’s termed ‘affordable’.[2]

So, there is strong demand for affordable housing – and house building is not keeping up. Which means HMOs are becoming ever more popular. A 2019 study by the BBC found there was a 5,000 shortfall in the number of new homes built in 2018. Campaigners say at least 23,000 new homes a year are needed in Scotland.[3]

In 2017-18 there were 15,671 HMO licenses in force on 31 March and this number has increased every year since HMO licencing was introduced in 2001. [4] This means that HMOs are an important part of the Scottish property rental scene.

HMOs can contribute towards alleviating the housing shortage. However, some local authorities have introduced or are considering introducing an over provision policy restricting the number of new licences that will be granted.

It is therefore becoming more difficult for landlords to create a new HMO. So, the number of available HMOs is not growing as fast as it used to, and yet demand is on the increase.

In my experience, the people claiming the HMO market is saturated have sub-standard properties in the wrong areas or don’t have any HMOs at all – just unsubstantiated opinion. To me, it is clear that the HMO market is buoyant not saturated.

So, if you have an HMO or are planning to buy one or convert an existing property, what do you need to do to be successful?

Here are four little ways to make a big difference.

  1. An attractive workspace
    Now that people are more likely to be working from home, having a desk, an attractive work area and fast broadband is important. If necessary, add extra lights to ensure the workspace is well lit, and ask an electrician to add a few extra sockets if needed so laptops, phones and other work paraphernalia can be plugged in and kept charged.
  2. Plenty of kitchen storage
    Ensure there are enough kitchen units to provide suitable storage and include a fridge and freezer. It’s surprising how many landlords don’t supply enough kitchen cupboard space. So, if your kitchen is small, look at clever ways to maximise the storage space – there are loads of ideas from places like IKEA. Thinking about the little things that make life easier can make a huge difference to your tenants.

3. Extra wardrobe space
While you can’t change the size of a house without major works, you can increase the storage and make it feel more spacious. Simple fixes like having two wardrobes, or adding shelving (for example, above doorways can be a great way to add a bit of extra storage space) can make a big difference. No one wants all their ‘stuff’ on display, so provide somewhere for them to tidy it away.

4. Exceptional service
This is the one that will make your properties stand out. From the first viewing to moving in, be proactive and attentive. Show your tenants you care about giving them a great place to live. Once they have moved in, don’t think that’s your job done! Look after them, make the experience of living in your property one they will remember and cherish. This helps housemates stay longer and also leads to more referrals.

It can take a little effort to create a really great HMO, but it’s worth it. If you get it right, you’ll have wonderful tenants, who stay longer. You’ll have fewer voids and your HMO business will be more profitable as a result.


Stephanie Taylor is Co-Founder of HMO Heaven and Rent 2 Rent Success. She started HMO Heaven along with her sister Nicky and has grown the property management business to contracts of over £2m in just three years. Her goal is to inspire others to believe bigger, be bolder and be gamechangers for good through the power of ethical property businesses. Her focus is on using property to do good in our community and in the world.





[1] https://www.savills.com/research_articles/255800/300939-0/how-uk-residential-rents-behave-in-a-downturn

[2] https://www.showhouse.co.uk/news/uk-needs-to-build-340000-new-homes-a-year-until-2031

[3] https://tfn.scot/news/7000-affordable-homes-shortfall-in-scotland

[4] https://www.gov.scot/publications/housing-statistics-houses-in-multiple-occupation/