Today, houses in multiple occupations are becoming increasingly popular among young professionals and students. Larger homes can be divided into several rooms or even individual apartments to be let out to different tenants. An HMO can often be a more profitable choice for a landlord with each tenant paying rent for their own share of the home rather than a combined rental fee. If you’re considering purchasing a large property to rent out as an HMO, here are some of the main things to consider.
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An HMO is a building or a part of a building that is occupied by more than two persons who are living as more than one household. The most common type of HMO is where two or more unrelated persons live in a home, paying rent for their own room, and sharing a kitchen and/or bathroom. However, there are various ways in which a building can be considered as an HMO, including buildings that comprise self-contained flats.
A house of multiple occupancy is any property that is shared by two or more tenants who are not a couple of members of the same family. The following types of accommodation are likely to be classed as an HMO:
If you are currently operating an HMO or intend to begin operating an HMO, it’s important to consult with your local authority in London, where you can get advice on the specific requirement from local Fire and Environmental Health Officers. If you’re contemplating converting a property in order to turn it into an HMO, local planning approval will be needed, and you will be provided with specific requirements and standards by building inspectors.
Any landlord operating an HMO will be required to fulfil all the usual landlord obligations when it comes to maintaining the property, its structure, and its internal services to ensure that it is consistently in a condition that is fit and safe for tenants.
The government regulates the quality of HMO accommodation to protect tenants in these properties from living in poor conditions. Landlords must comply with regulations to ensure that the conditions within the property are monitored and that there are not too many people living within the property. Some of the main legal responsibilities involved in letting an HMO include:
There’s also a national minimum private room size that must be adhered to when renting out an HMO. These are:
Rooms must have a ceiling height of at least 1.5 metres.
Landlords must also contact their local council to determine whether an HMO licence is required before letting to tenants. If you rent an HMO without a licence when one is required, you could risk a fine of up to £20,000.
In addition to the normal obligations of a landlord to maintain the property and ensure that it is in good repair, landlords must arrange HMO management of common areas in particular to ensure that:
Other key points to consider before starting an HMO include:
HMO tenants should also be held responsible for cooperating with their landlord to ensure that all regulations are met. This may mean:
An HMO can be a more profitable venture for landlords since rent is collected from each tenant for their respective rooms. This means that even if not all of the rooms in the property are filled, the landlord can continue to collect rent payments from the tenants currently residing in the property. Rental rates are often lower per tenant compared to renting an entire home, however, depending on the number of rooms in the home, landlords can often earn more with an HMO compared to letting the property to a single tenant or household.
However, despite the potential to earn more, landlords need to be aware of the additional costs that are involved with letting an HMO. These include:
As the busiest and often the most expensive city in the UK, landlords in London have a lot of opportunities with an HMO. London is home to many young professionals who are looking for a shared home rather than to rent an entire property, which makes it an ideal choice for landlords who want to reach the biggest market. Districts like The City, Angel, Camden Town, Brixton, Shoreditch, and Clapham are popular with young professionals and have a lot of large properties that make ideal HMO locations whether you want to offer shared accommodation or self-contained flats.
Deciding to let an HMO is a big decision, and you will need to consider how you are going to advertise your rooms to your potential tenants. There are several benefits of living in an HMO for tenants compared to renting an individual property for oneself. Some of the main benefits of living in an HMO that make them a popular choice for tenants and increasingly popular with landlords include:
Whether you are already a landlord in London or are considering purchasing a property to let, there are various reasons to consider an HMO. Not only are houses of multiple occupancies becoming increasingly popular with tenants, particularly in cities like London that are filled with young professionals, but they also offer landlords the opportunity to earn more money and continue taking rent payments even when the entire house is not filled.
Before purchasing a house to rent as an HMO, it’s important that you are aware of the responsibilities that you will face as a landlord. These include applying for an HMO licence from your local council where applicable, getting planning permission for converting the property if needed, and ensuring that the property meets all HMO regulations.
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