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HMO case study

HMO Case study

How Outlet DOUBLED one HMO landlord’s net income in three years

As well as more than doubling returns, Outlet ensured that one ‘accidental’ HMO landlord in London was able to meet all council regulations – and make their HMO property a safer, more pleasant place to live.


We were approached by the owner of a restaurant on Old Compton Street, Soho W1. They had taken on the leasehold of a building for the ground floor and basement as their restaurant. However the lease was for the whole building, which included 20 residential units, all rented on periodic tenancies. It soon became clear to them that they did not have the necessary knowledge to run the rental areas.

The majority of the tenants had lived in the building for many years, and rents had not been reviewed or increased. In addition, the communal areas were in a very poor condition and required a lot of repairs and redecoration. It was clear that the cost of repairs against the rent income resulted in a very low profit for the company. In addition, many of the tenants wanted to pay their rent in cash, and so would constantly come into the restaurant to pay – confusing and not very efficient or professional. No system was in place to keep track of who had paid either.

What we did

We took over the management of the building in March 2010. Straightaway we needed to organise repairs and ensure that health and safety procedures were in place. We arranged for the fire alarm system to be checked, fire extinguishers and smoke detectors to be installed, conducted a fire risk assessment and set up a routine to have all of these checked by an engineer, as requested by the London Fire Brigade, and required by current legislation.

The local council (Westminster)had also attended the building and listed various repairs that were required in order to comply with the HMO (House in Multiple Occupation) licence. We set up a work plan and listed all works in order of priority. Then we worked with the council over the next two years to rectify all the issues highlighted.

As tenants left, we advertised the rooms for the right amounts for the area, almost always matching the figures advertised. As repairs were completed and rooms redecorated we began to achieve much better rents, which aided the repairs and made the building a much more pleasant place to live in. Over a period of three years, we had begun to tip the balance, so repairs were no longer costing more than the rents that were coming in.

The outcome

In three years rental income increased by nearly £58,000, while expenses had remained at around £30,000 per year. Net annual income had risen from £55,000 in 2010 to £103,000 in 2013.

Had the owners not used us and our expert knowledge of how to run HMO buildings and tenancies it was likely that the scales would have tipped and the rents would no longer have been enough to even cover the cost of the repairs, let alone the owners’ rent and the utility bills for the building.

Worse still, if the repairs had not been done it is likely that the council would have closed down the residential areas, and the owners may even have been prosecuted for not complying with safety legislation.

Could we do the same for you?

Many leases that companies take on buildings in central London come with additional flats/bedsits above offices and restaurants, making them what you might call ‘accidental landlords’. The natural instinct by the owners is often to run these themselves, as they believe it would save paying managing agents.

However, from this case history we hope it is clear that, in fact, managing agents can not only pay for themselves in the increased income, but increase income for the owners. At the same time giving them the peace of mind that all legislation and procedures are in place, and their properties are safer, more pleasant places to live in, thereby allowing the owners to run their business much more effectively.

The result is that landlords, tenants and the council are all happy.

And if you’re in a similar position, and would consider asking us to do the same for you, we’d be more than happy too – so please just contact us now


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