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Aug Fri 22, 2014, 9:35 PM

A Guide to Becoming an HMO Landlord


Lock and KeyWe have all heard the news that there is a lack of affordable housing throughout the UK, and as many people can’t afford to save for a mortgage deposit more and more are looking to live in private rented accommodation. However, even landlords are finding that they don’t have enough housing to cope with demand, which is why many are now choosing to convert their properties into “Houses in Multiple Occupation” – more commonly known as HMOs. But what are HMOs and what regulations do landlords have to adhere to in order to rent their properties out as them? Here we go through the basics:

What is a House in Multiple Occupation?

According the government website, a House in Multiple Occupation is a property where three or more tenants are living together, forming more than one household and/or a property where you share toilets, bathroom or kitchen facilities with other tenants. A ‘household’ officially consists of either a single person or members of the same family living together, so for instance if you have a four bedroom property with one family living in two rooms, and then you rent the other two rooms to another family, the property then becomes a House in Multiple Occupation.

Is there a demand for these kinds of properties?

The simple answer to this question is yes; however you have to keep in mind that not everyone would be happy to live in a property with another family. Students are one of the most common tenants in HMOs, so if you are letting out in areas near universities you will find a huge demand for these types of properties. Young professionals are also often happy to live in shared housing, as it means they can live in a large property with more facilities but only have to pay for the room they rent. Families (especially those with young children) are less likely to be happy living in an HMO, so you need to understand the tenant market in your area and then plan accordingly.

How do I become an HMO Landlord?

There are more regulations for landlords who choose to rent out properties as HMOs in order to prevent properties becoming overcrowded or not having enough facilities for the amount of people living there. In order to become an HMO landlord you will need to apply for a specific licence, however in some areas local councils may require additional licences for HMOs so that they can ensure your property is of an adequate standard. If you are thinking of becoming an HMO the first thing you need to do is contact your local authority to get more information on what type of licence you need.

What do Local Authorities consider when granting an HMO licence?

Before you are granted an HMO licence it is very likely that your local council will want to visit your property and check whether it is suitable for a number of households to live there. They will mainly check whether there is a fair amount of amenities available for the amount of people you want to let the property to, such as toilets, bathrooms and kitchen facilities. Your local authority will also look at you as a landlord and how you have previously conducted your business in order to make sure that you are capable of managing an HMO. It is very likely at this point they will ask you what plans you have in place in order to keep the property well maintained and up to regulation, so you should make sure you plan ahead for this before they visit!

What if I decide to stop renting my property as an HMO?

Renting a property as an HMO can sometimes be quite stressful, as not only do you have to make sure the house is constantly maintained but also have to deal with issues such as tenant confrontation. If you decide you no longer want to rent your property out as an HMO you will have to wait until the Shorthold Tenancy Agreement ends for all those that occupy the property and make sure that you adhere to all legal proceedings when notifying your tenants that you no longer wish to let the property to them. Landlord insurance can help cover the cost of legal fees, however you should also consult a solicitor as if you manage this wrong you could be accused of committing a criminal offence.

Whilst it may seem that becoming an HMO landlord is time consuming and demanding, if you keep your properties well maintained and your legal work up to date then it is actually extremely rewarding. Remember, it may be more effort to run an HMO but in return you will gain high yields.

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