As the recession continues to bite and people look to tighten their belts more and more of them are prepared to rent a room as opposed to a whole house so as to reduce their personal outgoings.

We have said many times that without enough new properties being built in the right places the law of supply and demand would eventually force rents up. But without associated wage rises many people will be forced into ever smaller accommodation. Now we are seeing this in action according to SpareRoom.co.uk.

But with this comes the problem of ‘unlicensed’ houses in multiple occupation (HMO). Where dodgy landlords cram as many people into a house as possible ‘overlooking’ the fact that they may need to pay for a licence and be approved landlords within their local area structure.

With landlords able to make more money from an HMO than from a standard let why would they want more houses to be built? Better to stuff as many people into the current stock as you can. This is definitely a backward step for Britain.

SpareRoom.co.uk reports that house shares with six or more bedrooms are the fastest-growing property type on its website as landlords react to increased demand for lower rents. But as the cost of living soars and demand for rooms in larger properties increases, the trend could lead to a growth in unlicensed HMOs it says.

Over the past year, SpareRoom has seen a 59% surge in rooms available in bigger house shares with six or more bedrooms, a 51% increase in rooms in five-bedroom house shares and a 43% rise in rooms in four-bedroom house shares. In London, SpareRoom’s figures show a massive 79% hike in rooms in properties with six or more bedrooms and a 74% increase for rooms in five-bedroom properties.

Larger flat shares are becoming more prolific in the current financial climate as people look to reduce rental and living costs. In the UK as a whole, room rents for two and three-bedroom flat and house shares cost an average £426 per month, while rooms in four to six-plus bedroom house shares cost an average £397 per month, according to rental figures from SpareRoom. That’s a saving of £348 per year on rent. In London, the average monthly rent for a room in a two-bedroom flat share is £809, but in a house share with six bedrooms or more, tenants will pay just £710, a sizeable saving of £99 per month or £1,188 per year.

But this surge in supply could lead to a growth in the use by landlords of unlicensed HMOs. Landlords of larger properties have extra legal responsibilities and must register with the relevant council for a licence if they have five or more unrelated people sharing and the property is at least three storeys high. In some cases, local authorities can demand licensing for other types of property. This is why it is important that any landlords keen to enter this growth market familiarise themselves with the regulations surrounding HMOs, before they rush to rent out larger properties to sharers.

Matt Hutchinson, director of Spareroom.co.uk, comments: “Faced with stubbornly high living costs, jobs uncertainty and, in many cases, reduced incomes, renters are increasingly looking to make savings wherever they can, and sharing a larger property with more people is a simple way to do that. Not only is the rent cheaper, but monthly bills are lower when divided amongst a bigger group, too.

Landlords can reap higher yields from larger properties and tend to rent by the room in bigger house shares, as it can be difficult to find a big enough group of sharers that will move in altogether, unless their property is located in a university town or city and they are targeting the student market.

Landlords of larger properties should check if they require an HMO licence, so that their property meets the appropriate fire safety standards. There is useful information about HMOs on direct.gov.uk."

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