Landlord's Guide to HMOs - House In Multiple Occupation
What is a HMO - House In Multiple Occupation?
A HMO, or House In Multiple Occupation, is a property that is let to three or more tenants who form two or more separate households and share facilities such as kitchen, bathroom and toilet. The government classifies an HMO as any home where individuals from different households are living together in the same building and sharing facilities.
The law surrounding HMOs can be complicated, but it generally relates to renting out flats, bedsits and other multi-occupancy dwellings. It includes aspects such as safety regulations and minimum standards for facilities like heating, lighting, fire safety and ventilation. Landlords must adhere to certain legal requirements when operating an HMO. These include obtaining a licence with the local authority if the property has five or more occupants from two or more separate households, and meeting certain minimum room size requirements.
Landlords of HMOs are commonly in charge of taking care of shared areas like bathrooms and kitchens, as well as making sure that tenants have access to a safe environment. This may include inspecting the building for fire safety or other dangers. Also, if any issues or disagreements come up between tenants, it is usually the landlord's job to resolve them.
Legal Definition of a HMO
A HMO is defined by the government as any home which is occupied by at least three tenants who form two or more separate households and are living in a shared building. It may also include bedsits, hostels, lodging houses, and self-contained flats. A household can be either a single person or a family
HMO Tenancy Agreements
The tenancy agreement for each individual HMO tenant should include the terms of occupancy, rental payments, deposits, and any other requirements of both parties. The agreement must also abide by all relevant housing laws.
Advantages of HMOs
HMOs tend to be cheaper than individual properties, and they offer tenants more flexibility by allowing them to rent a single room or multiple rooms within the same property. This is often beneficial for students, who may need temporary accommodation while studying. HMOs also provide landlords with more potential rental income, as they can rent out multiple rooms in one building.
Disadvantages of HMOs
HMOs can sometimes be less secure than individual homes, as there may be a higher risk of disputes between tenants. Also, HMO landlords have more responsibilities and must ensure that their properties meet the required standards for health and safety regulations. This could involve additional costs or time spent on repairs and maintenance. Furthermore, HMOs are subject to stricter regulations from local authorities, which could cause increased paperwork and bureaucracy for landlords. Definitely consider these things:
- There are more risks when you have many tenants. This includes more damage and repairs, which costs more money. Additionally, it is more difficult to collect rent from several people at once.
- There is a greater risk of domestic conflict between tenants in an HMO. This is not really surprising because the model is based on strangers living together.
- HMOs require more management and time than other types of rentals. Landlords have to comply with more regulations, particularly regarding safety.
- Capital growth is the increase in value of an investment over time. This can be lower for HMOs that have been converted because they are usually worth less than regular houses when people want to buy them.
- Higher start up costs because you will need to buy furniture.
What is the Law on HMOs?
The Housing Act 2004 is the main piece of legislation that covers HMOs. Under this act, local authorities can require an HMO licence if a property meets the definition set out by law.
You can read the specific law relating to HMOs below:
The Management of Houses in Multiple Occupation (England) Regulations 2006
The Management of Houses in Multiple Occupation (Wales) Regulations 2006
What are the HMO Landlord Responsibilities?
HMO landlords must ensure that the property meets the required standards for health and safety, fire safety, and other regulations. This could include installing smoke alarms, carbon monoxide detectors, fire doors, and windows with locks. Landlords are also responsible for taking care of shared areas like bathrooms and kitchens as well as resolving any conflicts between tenants.
Who pays the bills in a HMO?
HMO landlords usually cover the bills for common areas like bathrooms and kitchens, while tenants are responsible for their own electricity, gas and water bills. This should be made clear in the tenancy agreement. If you want to, you can pay for the everything that the house needs like water, electricity, and gas. Make it clear!
Licensing for HMOs
Landlords need to obtain and renew a HMO licence every five years, depending on the borough
Your local authority can give you information about how to get a licence, which one(s) you need and how much it costs. In my experience, they usually cost between £100 and £200 per year.
A license is like a permission slip.
Most councils have a program where they visit the HMOs to make sure they are safe and clean. If the property is not up to standard, the landlord or owner needs to improve it before they can get a license.
As long as you do what the law says you should do, you will get a license.
- To ensure fire safety, make sure that(ask your local council for details)
- The property is not overcrowded
- There are adequate cooking and washing facilities
- Communal and shared areas are kept clean and in good repair
- Every five years, have the electrical wiring and appliances checked and certified as safe. Appropriate storage and disposal facilities should also be in place.
The council will usually only refuse to grant a licence if they have serious concerns about how the HMO will be managed. Failing to acquire a valid HMO licence before letting is a criminal offence, and non-compliance can lead to hefty financial penalties, and it could also mean that your tenants will be required to vacate the premises.