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Converting Your Property into a HMO

By 29 January 2021December 16th, 2021No Comments

There are a number of legal obligations you have as a buy to let landlord, such as adhering to fire safety and security standards and carrying out regular maintenance and gas/electric checks to name a few. These obligations increase substantially if you manage a House of Multiple Occupation (HMO).

But what is a HMO? A House of Multiple Occupation means that multiple individuals live in the same property and pay rent per room. More specifically, if your property is let to at least three individuals who aren’t related and who use a communal kitchen, bathroom and sitting areas, then you own an HMO.

HMOs tend to have better yields and higher profits than a standard buy to let properties. This is why they are so attractive to investors, however, HMOs require a lot more extra work. Here’s some useful information to help you convert your property into a HMO and start building your legacy.

HMO Licensing

For a start, if there are five tenants or more, you’ll require a HMO license by your local authority. The licensing cost varies from council to council -you’ll pay £470 for an HMO in Derbyshire and £1,200 if your HMO is in Barnett in London.

Your licence will have to be renewed every five years. During this time, your council will visit your property to carry out a Housing Health and Safety Rating System (HHSRS) risk assessment.

Please note that people with a criminal record or who have been pulled up for poor landlord management in the past, will not be awarded a licence.

Fire Safety

Regular fire drills must be held with all tenants in attendance. There should be a fire blanket in the kitchen and preferably a fire extinguisher in any large HMO property, as well as working smoke alarms on every floor.

Fire exits should be clearly marked, with no obstructions in front of them and there should be fire safety lighting. At least one fire door will be necessary – make sure to check with your council as guidance varies from council to council.

Any fabric or fittings in the building should comply with fire safety rules prohibiting flammable materials in the rented property.

Room Size Stipulations

  • The room size for one person should be at least 6.51 sq meters (unless for a child under 10).
  • The room size for two people  increases to 10.22 sq metres.

HMO Habitation Rules

A relatively new legislation, the Homes (Fitness for Human Habitation) Act 2018 introduced new standards for all buy to let properties including HMOs. The legislation outlines health and safety standards, giving tenants the right to take their landlord to court if these aren’t maintained.

The type of areas it applies to is overcrowding, poor drainage, dampness and lack of ventilation and a sub-standard water supply.

HMO Mortgages

It is important to note that your current buy to let mortgage may not be sufficient if you turn your property into an HMO. In many instances, you might need a special HMO mortgage for your property.

HMO Training from Sourced

At Sourced, our HMO experts provide training, support and guidance to help you convert your current buy to let property into an HMO. You’ll get the ins and outs from experienced HMO landlords, as well as tips on maintenance and dealing with an increased number of tenants.

To find out how Sourced Franchise can help you generate an income from HMOs, download your copy of our Sourced Network prospectus.

Sam Clayton

Franchise Manager