Understanding HMO: What is HMO and How it Affects Property Investment in London
If you are planning to invest in rental properties in London, one of the terms that you will frequently encounter is HMO or a House in Multiple Occupation. HMO is a type of rental property where three or more people reside who are not part of the same family and share basic facilities such as a kitchen, bathroom, or toilet.
Under the Housing Act 2004, Houses in Multiple Occupation are subject to specific rules and regulations, and landlords must comply with them to ensure the safety and well-being of their tenants. In this post, we will explain what HMO means, and how it affects property investment in London.
What is HMO?
HMO, as mentioned earlier, refers to rental properties that are occupied by three or more people who are not part of the same family and share basic facilities. HMO is common among students, young professionals, and low-income individuals who want to rent affordable accommodation.
There are different types of HMO, such as:
• Licensed HMO – This refers to properties occupied by five or more people who are from two or more households and share basic amenities. A license is required from the local council to operate a licensed HMO.
• Mandatory HMO – This applies to properties occupied by five or more people who form two or more households, share basic amenities, and the property has three or more floors. A license is mandatory for a mandatory HMO.
• Additional HMO – This refers to properties occupied by three or four people who are from two or more households and share basic amenities. An additional license is required to operate an additional HMO.
How does HMO affect property investment in London?
HMO can be an excellent investment opportunity for landlords in London. However, it comes with additional responsibilities and requirements that landlords must adhere to.
One of the significant benefits of investing in an HMO property in London is its higher rental yield potential compared to a single-let property. This is because HMO properties allow landlords to rent out multiple rooms instead of a whole property to individual tenants, which increases income potential.
However, landlords must ensure that their HMO property complies with the regulations set out by the Housing Act 2004. Failure to do so could result in legal issues, hefty fines, and, in extreme cases, imprisonment.
Some of the requirements that landlords must abide by include:
• Providing adequate fire safety measures such as fire alarms, fire doors, and emergency lighting.
• Ensuring that the property meets the minimum room sizes and facilities requirements.
• Maintaining the shared facilities such as the kitchen and bathroom to a good standard.
• Undergoing regular safety checks and inspections.
• Obtaining the necessary licenses from the local council.
In conclusion, HMO can be an attractive investment opportunity for landlords in London. However, it comes with additional responsibilities and requirements that must be met to ensure the safety and well-being of the tenants. Landlords must familiarize themselves with the rules and regulations governing HMO properties and comply with them to avoid legal issues and hefty fines.
