With lots of new changes happening in the property industry, a lot of people are talking about HMOs as a leading property investment strategy. But what is HMO – let’s demystify few concepts around it?
HMO stands for House of Multiple Occupation.
An HMO is a property that is let by rooms to individual tenants. Essentially, it is any house where two or more unrelated people live together in separate rooms AND share certain common facilities, including the kitchen, dining area, garden, toilet, and shower. If these conditions are met, you can call it a House of Multiple Occupation.
If a toilet and shower are located inside a private room, this is known as an en-suite room. However, from the perspective of the whole household, the property is still classified as a HMO because the kitchen would still be shared.
Common misconception: There is much talk about HMO regulations, licensing, and safety standards taking place, but it is a common mistake to think that if your house is an HMO it will automatically fall under all these regulations and will cost you a fortune to setup and maintain. It usually differs from council to council (therefore please check with your local borough council). There are many types of HMOs. For instance, some HMOs require planning permission and license, some require just a license and some do not require a licence.
There are three different type of HMO licensing:
- Mandatory licensing – which applies nationwide
- Additional licensing – which varies for each council
- Selective licensing – which also differs for each council.
There are also new planning regulations which came into force quite recently – Article 4.
All the information can be found in your council’s website, however you can always contact us and we will help you establishing whether or not your property needs a license.
Nonetheless, even if you do not need a license, you are still required to maintain a certain level of safety standards. This includes the installation of working fire alarms, clear fire exits, hygienic facilities, an operational heating system and water supply, waste disposal, and minimum room sizes.
The most important thing to remember is this: if you are renting your property by rooms to independent tenants who share the common facilities, then your property is a HMO, automatically.
In most cases, the reason why most landlords decide to rent their properties as HMOs is because of higher rental income, more control in what’s happening at the property and less wear and tear in the property (when compared to a family-let property).
I hope this post helped you understanding the concept of HMO a bit better. If you need any help or advice on HMO regulations, HMO management or any other advice in relation to Houses of Multiple Occupation, please feel free to contact us.