Nearly half of shared living tenants will happily pay a rental premium of up to 10% if they knew that they were socially compatible with their housemates, according to our latest research at HMO management platform COHO.
Shared living is something that many people have or will experience at some point in their life, and perhaps the most common motivation for moving into a shared house, sometimes referred to as an HMO, is the relative affordability they provide when compared to the wider private rental sector (PRS).
In fact, in a recent survey that COHO commissioned we found that the majority of tenants (57.5%) viewed the affordability of shared living as the biggest benefit from their time in an HMO.
Affordability leads but social is also important
It’s no surprise that affordability is the first thing that springs to mind when it comes to the benefits of shared living, especially given that Britain’s average rent has increased by +8.1% in the past year alone to sit at £1,338 per month.
However, affordability isn’t the only reason that people choose to live in shared houses. The survey found that the social aspect associated with a shared living arrangement was also a big benefit to tenants.
In fact, 48.6% of respondents ranked the ‘sociable way of living’ as a key benefit, making it the second most prominent, whilst 43% said it was ‘good for people moving to new cities’ looking to form social relationships, the third biggest benefit.
We then asked if renters would be willing to pay up to a 10% rental premium, if it ensured that they were living with like-minded housemates who share similar interests.
Willing to pay a premium
Whilst 26.5% stated that like-minded housemates were preferable but cheaper rents were a greater priority, 47.2% stated that they would be happy to pay as much as 10% more in rent to find the perfect house share.
Such is the desire for social compatibility within a house share that 65.9% of those surveyed stated that knowing what their housemates are like before moving in was of great importance, with 39.8% of them assigning it the highest possible importance score.
Furthermore, almost 40% of respondents said that they would be more eager to make their move to a shared living property knowing that they were compatible with their housemates.
Shared living is an age-old part of the rental market, but in more recent years it has been undergoing a significant evolution driven by changing tenant expectations and priorities. While affordability was once considered to be the only motivating factor among renters opting for HMOs, it is now increasingly common for people to seek out a shared house as a lifestyle choice, eager to take advantage of the sociability that this way of living provides.
An opportunity for landlords
It’s important for the sector to recognise this shift because it presents a real opportunity for landlords. In order to have a good social experience when living in a shared house, it’s vital that you get along with your housemates, yet it remains far too common for tenants to have little control or insight over this compatibility before moving in because they’re not given a good enough opportunity to understand the personalities, interests and lifestyles of the people they’re agreeing to live with.
HMO landlords who can provide their existing and prospective tenants with a good level of insight into the people they’ll be living with have a better chance of creating a relaxed, harmonious vibe in the house — which is great for tenants and, let’s be honest, good for business too.
Not only are you going to reduce tenant churn and, therefore, void periods, but as our survey reveals, you’re also creating the opportunity to charge a premium on your rent simply for giving your tenants the best chance of living with people they like.
