What Is an HMO Property? A Landlord’s Guide
A House in Multiple Occupation (HMO) varies in definition depending on which country you are in. For landlords, freeholders and property professionals, understanding the nuances of HMOs is crucial, as they come with specific legal obligations and compliance requirements.
What Defines an HMO?
England and Wales
254 HMOs, which means that if your property is rented to 3 or more tenants from more than one household, who share essential facilities.
257 HMOs, which means buildings that:
- Have been converted into self-contained flats; and
- The conversion did not comply with the relevant Building Regulations in force at that time and still does not comply; and
- Less than two-thirds of the flats are owner-occupied.
It is common to delve into the complexities of proving that a converted building meets the relevant building regulations, which can often be a convoluted and costly process.
Scotland
Means that if your property is rented to 3 or more tenants from 3 or more households who share essential facilities.
HMOs are not always licensable, and conforming to the relevant legislation is not optional if you don't require a licence. Local councils run HMO, Additional HMO, and Mandatory licensing, and sometimes HMOs are covered by Selective licensing. HMOs can also require HMO, Article 4 HMO or Sui Generis Planning, or if you have the evidence and meet the requirements, you can apply for Lawful use. With this in mind, it is vital to check with your local authority to determine the requirements applicable to your specific property or contact Yuno for support.
Types of HMO Properties
HMOs can vary widely in their configurations, common terminology includes:
Properties rented by groups of friends or colleagues who share communal spaces and facilities, all on the same contract and no locks on bedroom doors.
Individual rooms rented out separately on individual contracts, generally with locks on bedroom doors, with tenants often sharing kitchen and bathroom facilities. If there are locks on bedrooms doors but all on the same contract it will still be seen as a bedsit HMO.
Structures converted into flats or studios that may not meet current building regulations, known as Section 257 HMOs. This is the Freeholders responsibility.
Do You Need an HMO Licence?
Licensing requirements for HMOs depend on the number of occupants:
Lost rent & delayed traMandatory Licensing (England and Walesansactions
Required for properties occupied by five or more individuals forming more than one household, sharing facilities. In Wales only, the property must be 3 or more stories, and in England only, there is an exemption for flats that have 3 or more flats in a purpose-built building.
Additional Licensing (England and Wales
Local councils may require licences for smaller HMOs or specific property types and converted buildings within designated areas.
HMO Licensing (Scotland)
Local councils may require licences for smaller HMOs or specific property types within designated areas.
To apply for an HMO licence, landlords must contact their local council, provide necessary documentation, and pay the applicable fees. It’s essential to consult local regulations, as licensing criteria can vary.
Benefits and Challenges of HMOs
Benefits
- Higher Rental Yields: Renting individual rooms can generate more income compared to single-tenancy agreements.
- Diversified Income: Multiple tenants mean that vacancy in one room doesn’t result in a total loss of rental income.
Challenges:
- Increased Management: Coordinating multiple tenancies requires more time and effort.
- Regulatory Compliance: Ensuring the property meets all safety and licensing standards is imperative.
- Tenant Turnover: Higher turnover rates can lead to increased maintenance and administrative tasks.
HMO Compliance and Safety Regulations
Landlords and Freeholders must adhere to stringent regulations to ensure tenant safety, including:
- Fire Safety: Installing smoke alarms, fire doors, and providing clear escape routes.
- Gas and Electrical Safety: Conducting annual gas safety checks and obtaining electrical safety certificates.
- Property Standards: Maintaining adequate room sizes, proper ventilation, and sufficient facilities for the number of occupants.
Non-compliance can result in significant fines, legal action, and reputational damage.
Managing an HMO Successfully
Effective HMO management involves:
- Tenant Relations: Establishing clear communication channels and addressing issues promptly.
- Regular Maintenance: Conducting routine inspections and upkeep to ensure the property remains in good condition.
- Record Keeping: Maintaining detailed records of safety checks, tenancy agreements, and communications.
- Staying Informed: Keeping abreast of changes in housing regulations and local council requirements.
Is an HMO the Right Investment for You?
Of course, you don’t need to split a property up to be an HMO, professional investing in an HMOs can be lucrative, though it requires careful consideration of factors such as:
- Financial Capacity: Assessing the costs of property acquisition, necessary renovations, and ongoing maintenance.
- Time Commitment: Evaluating the time required for tenant management and compliance tasks.
- Risk Tolerance: Understanding the potential challenges, including tenant disputes and regulatory scrutiny.
Conducting thorough research and seeking professional advice can help determine if an HMO aligns with your investment goals.
Need Help with HMO Compliance?
Navigating the complexities of HMO regulations can be daunting. Yuno offers comprehensive services to assist landlords, freeholders and property professionals in achieving and maintaining compliance, including:
- Instant checks and Live monitoring of your portfolio: Identifying which properties require a licence and planning couldn’t be easier with Yuno’s API and platform to support you.
- Eligibility Assessment: Determining if your property requires an HMO licence based on local regulations.
- Licensing and Planning Application Management: Handling the preparation and submission of all necessary documentation to ensure accuracy and completeness.
- Compliance Guidance: Providing advice on meeting all regulatory standards, including property improvements and management practices.
- Compliance Upgrades: Yuno provide access to accredited experts for advice and upgrades where required.
- Expert Advice: Access to professionals with in-depth knowledge of HMO regulations and best practices.
- Compliance Tracking: Yuno tech tools are used to monitor and manage ongoing compliance obligations.
By partnering with Yuno, landlords, freeholders, and property professionals can ensure their HMO properties meet all legal requirements, providing peace of mind and safeguarding their investment.
