Landlord lowdown: A guide to HMOs

By 25th May 2016 Landlords

If you’re a landlord, or thinking of becoming one, it’s important that you know about HMOs, because this potentially lucrative type of property is held to different standards by the government. Curious? Here’s the full lowdown on HMOs and what to do if you have one.

What is an HMO?

HMO stands for ‘House in Multiple Occupation’, and a property is an HMO if both of these conditions are met:

  • At least 3 tenants live there, forming more than one household (a household is one or more people who are members of the same family, including married or co-habiting couples, relatives and half-relatives, and step-parents and step-children).
  • The tenants share toilet, bathroom or kitchen facilities.

So, for example, a property rented to a family consisting of two married parents and their two children is not an HMO, as the tenants form just one household. A property rented to a group of four students who are not related to each other, and who must share one kitchen, is an HMO.

There is also another classification, the ‘large HMO’. You have one of these if all of these conditions are met:

  • The property is at least 3 storeys high.
  • At least 5 tenants live there, forming more than one household.
  • The tenants share toilet, bathroom or kitchen facilities.

What do I do if I have an HMO?

In 2006, as part of an attempt to raise standards for HMOs, the government brought in HMO licensing, and it is up to individual councils to decide whether a property is big and well maintained enough to support the number of tenants.

If you have a large HMO you will need a license. A license lasts for 5 years, and you must have one for each large HMO you run. You will be charged a fee for your license, but the fine for letting out an unlicensed HMO is £20,000, so do make sure you have one.

Depending on the area in which you live you might also need a license for a small HMO, so check with your local council.

800px-Bristol_council_house,_College_Green_-_DSC05689

What are the standards for an HMO?

All HMOs, large and small, must be maintained to certain standards. Whether your HMO is in the form of bedsits, student accommodation or a house or flat share, make sure that it complies with these basic rules:

  • The property has sufficient fire safety measures; licensed HMOs require smoke detectors.
  • The property has annual gas safety checks, and the electrics and appliances are checked every 5 years.
  • The property is not legally overcrowded.
  • The property has sufficient cooking and washing facilities.
  • The communal areas are clean and in a good state of repair.

You can find out more detailed HMO standards here.

Are there upsides to having an HMO?

It might sound like having an HMO is nothing but hassle and expense, but do it right and these properties can actually be big earners for landlords. There is now a much bigger market in the UK for flat shares and house shares as rents rise and fewer people can afford to live on their own. If you enjoy being a hands-on landlord, or you want to generate significant cash flow quickly, renting out an HMO could be your answer!


You can check out this website for more information about HMOs.

Interested in letting out a property you own? Contact Gough Quarters today to find out more.

 

Image sources:
Somerset St, Bristol by Nigel Mykura [CC BY-SA 2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons
Bristol Council House by Rept0n1x (Own work) [GFDL (http://www.gnu.org/copyleft/fdl.html) or CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons

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