HMO
Aston Woolf are HMO experts and help many landlords manage their single and multiple HMO property portfolio.
What is an HMO?
Let Us Explain
A HMO is a property which houses 3 or more people in 2 or more households where facilities such as kitchens and bathrooms are normally shared. It may include bedsits, shared houses and some self contained flats.
All HMOs require a license and are subject to management regulations and inspections under the Housing Health and Safety Rating System (HHSRS).
This ensures that the property is managed properly and meets certain safety standards. The licence will be valid for up to five years, and will then have to be renewed.
What types of properties are classed as HMOs?
Special legislation applies
The following types of accommodation are all likely to be HMOs:
- shared flats and houses
- bedsits
- hostels
- halls of residence for students or nurses
- boarding houses
- hotels or bed & breakfasts with permanent residents
- some supported accommodation, such as foyers or ‘move on’ accommodation for homeless people
Key Points
- HMOs are far more profitable to run than other types of residential lettings with rental incomes often two to three times those of single households.
- HMO’s have more overheads but can produce up to 75% more rental income and a ROI of 13% to 20%
- They require far more in terms of management time and effort.
- They require more in terms of initial investment to meet stringent health and safety regulations.
- Some types of HMO require the landlord to be licensed by the council.
What must I do to start an HMO business?
The Beginners Guide
- If you are operating or intend to operate residential lettings in this category you would be well advised to consult with your own local authority. Local environmental health and fire officers will advise on the requirements.
- If you are contemplating conversions then local planning approval will be required and the building inspectors will specify standards and requirements.
- A landlord operating HMO type property will be under all the usual obligations of a landlord to maintain the property, its structure and internal services, in a fit and safe condition.
- In addition, landlords will need to arrange the management of their HMOs and in particular the common areas ensuring that:
- layouts and facilities meet minimum standards
- the property is maintained in a safe and habitable condition and that occupancy is maintained at an acceptable level
- you register with your local authority and provide details of residents and changes in occupancy
- a responsible person is identified to manage the property and that their contact details are prominently displayed on the premises
- stairways, passageways and fire escapes are cleaned and free from obstructions
- fire extinguishers and fire alarms are regularly tested and maintained
Tenants
Tenants of HMOs have a responsibility to cooperate with their landlords to ensure that the regulations are complied with. This may mean allowing access to rooms at reasonable times.
Tenants who don’t pay their rent on time, who cause damage to the property or nuisance to other occupants and neighbours will be in breach of their tenancy agreement and could face eviction proceedings.
The following points are important for landlords of HMOs:
- Landlords operating certain types of HMOs will need a licence from their local council
- Landlords are liable for the occupiers’ Council Tax and therefore an amount to cover this should be included in the rental
- Landlords converting properties into HMOs need to be aware of planning and building regulations.
- Environmental health and fire regulations must be complied with
- A special insurance policy will be required
- Nuisance claims brought by neighbours, are likely due to increases in noise and rubbish. If not managed correctly, the landlord could be held partly responsible for this
- The Landlord (or house manager) must, by law, be in control of the occupancy situation at all times. Tenants must not be allowed to come and go as they please without proper documentation. (This is also in the landlord’s interest, as facilitates proper rent collection and eventual possession.)
Let us help you too, we have the skills to develop, set up and manage HMO’s contact us.
Our sister operation, Aston Woolf for oversea clients – are dedicated to managing HMO properties for oversea landlord clients who hold multiple HMO property portfolio across the UK. If you are an oversea Landlord then let us help you.
