Southampton: Our Complete HMO Investment Guide
Southampton is a large port city located along the South Coast of England. Known for its football team and famously being the departure location of the RMS Titanic, Southampton is one of the largest cities along the South Coast and has a population of around 250,000 people. Why invest in HMOs in Southampton? Southampton makes an attractive choice for HMO investors. Its coastal location and cultural attractions, such as historic sites and cultural events, contribute to the city’s appeal. It’s close to the New Forest National Park and the educational institutions make it an attractive destination for students and young professionals. Southampton does however have a large blanket Article 4 direction which controls the conversion of houses to HMO’s. Southampton’s planning authority is notoriously difficult when it comes to HMOs given a long history of poor quality HMO properties disrupting the cohesion of the local community. There are tight rules and requirements when it comes to increasing HMO properties to larger HMO’s or converting family houses to HMOs. However, Southampton still approves houses to be converted into HMO’s even though it is an Article 4 location. But, you must meet the requirements, which we will go into more detail to explain below. Universities When it comes to picking a good HMO investment location universities are vital whether you wish to let to students or not. The type of professionals that rent HMOs are typically newly graduated and looking for local shared houses. These people will typically have a good amount of spare cash to afford the high end professional HMO room which is desirable to landlords. The city centre is home to 2 major universities including the University of Southampton and Solent University, with Winchester University only a 20 minute train ride from the city in the SO postcode area. This means there is a very high student population, making HMOs a reliable source of rental income. The prime letting period for students in Southampton is January and February which is when the best houses are reserved for the following year. There is another surge in interest in June – August when the overseas students come over and look for accommodation. Economic Activity Beyond students, there’s a large population of young professionals, especially in healthcare, maritime and shipping and tech and engineering sectors. This is because it is a large port city with many maritime jobs and is also home to Southampton General Hospital which specialises in major trauma care, neurosciences, oncology, cardiology, and other specialist areas, including a dedicated children’s hospital. Many professionals prefer shared housing such as HMOs for affordability and social reasons. Transport Links Southampton benefits from excellent transport links, which includes its port, central railway station with a direct line to London and Manchester and proximity to the M27. Proximity to public transport and amenities is often a crucial factor for tenants. In addition, the city centre covers 72.8 square kilometers making it a medium-sized city in the UK. Most of the urban area is walkable, but there are direct buses from most suburbs into the city centre and universities. Read more about Southampton transport links > Article 4 in Southampton Since 2012, an Article 4 direction has been in place in Southampton, removing permitted development rights to change a family home (C3) into a small HMO (C4). This applies to the whole city. Planning permission is therefore required to convert a dwellinghouse to a small/medium HMO as well as to convert a property into a large HMO for 7 or more occupants. However, on the HMO Checker HMO Planning Permission Tool we can see that there are many instances where C4 to C4 or Sui Generis applications have been granted: HMO Checker also assesses local authority websites for all the HMO relevant applications and makes an assessment over likelihood of permission. As you can see below, 62% likelihood is quite high, meaning Southampton as a council are generally still receptive to new HMO applications, so long as you meet their local guidance and requirements. The Houses in Multiple Occupation Supplementary Planning Document (SPD HMO), as well as the Southampton Council website states that the tipping point where the concentration of HMOs begins to adversely impact on the character and balance of a local community is set at 10% of HMOs in the housing stock. This means that they will not grant permission for any new HMOs where the proportion of HMOs within a 40 metre radius is above 10% (unless exceptional circumstances apply). The document also prohibits “sandwiching”, whereby a residential property is sandwiched between two HMOs. Using HMO Checker’s HMO Density Checker, we can set the radius to 40m and know whether the property meets the local requirement, see below: In the example above this property would not suit being converted from a family house to an HMO because it would bring the percentage of HMOs to family houses over the council’s 10% threshold. An interesting nuance to the council’s threshold of 40m and 10% is that if they do not find 10 residential houses within the first 40m radius, they will keep expanding it until they do. For example, if the property is within a commercial area, they will expand the radius until they find at least 10 residential houses. The obvious issue with this is that you could then unfortunately come across more HMO’s and thus the percentage would increase. Our advice is that if you do not see at least 10 residential houses in the radius check at 40m, proceed with caution or get in touch with an expert. We recommend reviewing the Supplementary Planning Document as it has been specifically written to help people understand the planning system and how the council intends to deal with planning applications for C4 HMO uses. The Article 4 Direction applies citywide, but areas with higher concentrations of HMOs, such as The Polygon (a location I lived in an HMO myself in my student days), Portswood, Bevois Valley, Swaythling, and Bargate, are particularly affected. Investors should