How the HMO sector can apply fundamental principles of the emerging coliving scene.
HMOs have existed and thrived for decades in the UK as one of the most accepted use cases of residential real estate.
And then came coliving.
At first glance, there is no big difference between the HMO and coliving concepts. In both cases tenants share basic amenities within one household while the tenants themselves do not constitute one household, as would be the case for a family unit. For many coliving operators, tenants use the same architectural structures as HMOs, from urban houses to apartments originally designed for one family unit.
It is therefore normal that certain critics of the coliving movement have claimed how coliving is simply “HMO rebranded”.
And they are half right.
Coliving does indeed share a lot of similarities with HMO operations in terms of building structure, number of tenants, and on-site operations. On top of that, a lot of HMO operators are now using the term “coliving” to amplify the branding of their existing offering without truly changing their services.
But coliving also brings with it higher standards to the HMO industry - in terms of business approach, operational focus, and overall customer service care. Adapting and implementing those standards would not only be a rebranding of HMOs, but a fundamental reconstruction of how the HMO model works.
Making the one big switch: user-centeredness
Here is one of the main differentiators between HMOs and coliving spaces:
Since coliving brands promote a very public image by putting their brand in competition with other industry players, coliving operators have a much higher incentive to maintain high customer satisfaction. Traditional HMO landlords rarely maintain such a public image, and in contrast to coliving brands, won’t be negatively affected by poor reviews. This higher level of customer service helps coliving operators in terms of higher retention and referral rates, lower acquisition costs and more organic marketing.
What differentiates the coliving model from the HMO model is being user-driven.
For the past few decades Apple and Amazon among other companies have used human centered design to put customers first in everything they do. But this trend hasn’t reached all industries - and the real estate sector remains one of the least customer-centric industries yet to be transformed.
In order for HMOs to transform themselves into coliving operators, there needs to be one fundamental desire coming from the operator: taking care of the resident experience. If this desire is put into practice, the internal processes of the operator will change to place a much bigger focus on improving the quality of the user experience.
Learnings from the coliving sector
If that change in mindset can be done, HMOs can learn from coliving spaces in many different ways:
- Branding. Coliving spaces purposefully create long-lasting brands, often themed with its own purpose and values, which creates more visibility and long-term business opportunities than non-branded spaces.
- Niche concepts. HMOs can also learn from coliving spaces to only attract specific types of customers. For example, creating customized living experiences for artists, single-family parents, or young professionals. If HMOs decide to enter the branding game, they can choose which audience to attract and create the tenant experience around it.
- Focus on experience. Coliving spaces intentionally design the entire customer journey from the moment someone hears about the brand to the moment they enter and start living within the space. This is where personalized onboarding mails, a personalized welcoming by the host or sponsored dinners come into play. The ultimate goal is not only to provide someone housing, but a desirable living experience in which the community is managed or facilitated by the operator.
- Customer first. Since coliving spaces differentiate themselves by offering an improved living experience, their customer needs have to come first. Being customer-centric implies receiving feedback from residents and implementing the feedback to improve the brand experience. It is the notion of creating a “landlord who cares” that could influence the HMO reputation positively.
Applying these principles to HMOs would help the sector move away from a “cares less about the tenant” reputation to one that is tenant-centred. The benefits are noticeable in the long-term - from better relationships with tenants and higher retention, to lower operational costs because residents start caring about the place. In the end, the coliving experience will lead to better outcomes for all parties involved: a better living experience for tenants and superior financial outcomes for landlords.
What it requires is a shift in mindset and a willingness to invest time, resources and energy into creating standards for the customers and implementing them. And that call starts now.
Written with Connor Moore and Cate Maiolini of Co-Liv.