There are many advantages that landlords will have access to when dealing with HMO properties. They can be extremely profitable, especially in comparison to typical rentals that they may already own. However, with these extra benefits, they will be responsible for additional demands which are put in place to protect renters. How can you look at these requirements and deal with them as an HMO landlord? In the guide, we are going to provide you with all of the information that you will need.
What Exactly Is An HMO Property?
Let’s look at the basics of these properties. First of all, HMO is an acronym that refers to houses in multiple occupation. Simply stated, this is a house that you are renting out to multiple people that will share this place of residence, and it will consist of either a single person, cohabitating couples, or families which can be referred to as ‘households’. To determine if the property that you have is an HMO property, you must understand the difference between the various types of HMO housing.
There are several types of HMO properties available:
A flat or house that is shared by three people or more, from at least two households, that will have shared or communal areas.
This is a home in which a landlord will be an owner or occupier, a place where to tenants may share this same property.
Going back to the Housing Act 2004, student accommodations are also referenced under HMOs (Reen Anderson). For example, a privately owned property that is shared by students, these can be treated as completely separate households and they may have exclusive use of the accommodation that is provided by the HMO designation.
This is where it gets very complicated: The part of the building, or the building itself, may actually be converted self-contained units which in and of themselves will not meet conversion requirements under the Building Regulations 1991, and if more than a third of the units are actually occupied by what are called short tendencies.
This can also be referenced as a Section 257 HMO.
For this to be considered as an HMO property, it must…
Be the primary residence for the tenants.
Be shared by two people or more.
A location where rent is paid by the tenants.
It is very important to remember that HMO properties are places where people are living under the same roof that are not sharing a toilet, kitchen facilities, a bathroom, nor are they related. Separate tenancy agreements would also be an indication of this as well.
What is a HMO license?
If you aspire to be an HMO landlord, there are a few other things to consider, such as determining if you need to have an HMO property license. In some situations, multiple occupancy HMOs actually legally require you to have a license to ensure that the property is being properly managed.
You will certainly need a license if:
The council maintains the opinion that the HMOs are not being properly managed. If this is the case, additional licensing, as well as the conditions of that property, will depend upon the local council itself.
Your property is above three stories in height and has more than five occupants from more than two households. This would be referred to as mandatory licensing.
If, after reading this, you are still not certain if your HMO property needs to have a license, you can connect with local authorities just to make sure. There are some councils that will require private landlords to obtain a license, or at least apply for one, so it is important to check on this to avoid unwanted fees.
Ways to Apply for an HMO license
HMO license application forms can be obtained by requesting them from your local council, after which this application can be filled out by the property manager or landlord. Unfortunately, there is typically a fee associated with doing so, and the amount of that fee will be dependent upon individual local authorities, a fee that you cannot get a refund on even if you are rejected. After it is issued, you will have this license for up to five years. You will then need to connect with and inform several ‘relevant persons’ regarding your application and also provide the council with details of what you have done.