HMOs (Houses in multiple occupation) have grown in popularity across the UK, and for a good reason. They bring many benefits to not only landlords but also tenants.
For landlords, they offer steady cash flow and high ROIs. While tenants can find accommodation at reasonable prices without a mortgage responsibility.
Anyone who wants to be an HMO Landlord needs to follow strict government regulations to get their property up to standard.
This blog outlines most things you need to know as a potential HMO landlord. From Planning to Building, Fire Regulations and HMO licensing, we have you covered.
What Are HMOs?
HMOs are properties that are rented out to more than one tenant from different households.
To qualify as an HMO, there have to be at least 3 tenants who share common areas like the kitchen, living room and sometimes bathroom.
This style of accommodation allows you to rent the space out per room meaning you have more people and rent.
The definition of HMO changes on how the local authorities define it in a certain area.
So, if you're looking for the latest HMO criteria, it's best to check with your local authority.
Key Regulations To Understand As An HMO Landlord
Before becoming an HMO Landlord, it's important to understand the regulations.
It also helps you to avoid getting into trouble down the line with the local authorities. There are serious consequences for owning and operating an HMO without a license.
You could be fined thousands of pounds for not having a license or putting your tenants in danger by not having your property up to code.
Planning (Change Of Use)
When a landlord or investor is looking to convert a property into an HMO, the first step is to understand the property Use Class.
This will determine whether there is a need to get planning from a local authority or council.
Whether building from the ground up or making changes to an existing home, it’s vital to know how many occupants you wish to and can fit.
This will determine the Use Class and whether you need HMO Planning Permission. A small HMO comes under the C4 Use Class (up to 6 unrelated occupants).
Normally, landlords don’t need to get planning permission for a small HMO unless it's in an Article 4 Area.
Article 4 areas restrict people from converting their properties into HMOs for several reasons. One of which is the negative impact on local resources like parking spaces and garbage.
If you're looking to convert a property into an HMO in an Article 4 Area, you'll need to get permission via a planning application.
Large HMOs come under the Sui Generis Use Class and converting properties this size will need planning permission.
If the council deems your property requires planning permission and you don't have it, it means you're in ‘breach of planning.’
In this case, the Local Authority can serve you an enforcement notice. Ignoring an enforcement notice is illegal and could get you prosecuted in a court of law.
Building Regulations
HMOs need to follow building regulations to ensure that their tenants are always safe.
This includes ensuring high quality safe and fire compliant construction work. Failure to follow Fire Regulations can lead to hefty fines and even imprisonment.
As a landlord, you must follow the rules and regulations outlined for HMOs by the government.
Every HMO must have a gas safety certificate, an electrical certificate, up-to-date smoke and EPC alarms, and be free of mould.
Sleeping accommodations need to be a least 6.51 sqm for 1 adult, and at least 10.22 sqm for 2 adults. Landlords also must make sure that every tenant has the ‘Right to Rent' in the UK.
You must make sure there aren’t more people living in the house than there should be, as this may go against regulations.
As a landlord, it's your responsibility to be aware of the rules and regulations. And keep up to date on any changing rules so that your tenants can live in a habitable and safe environment.
Fire Regulations
One of the most daunting things that can happen to a tenant and a landlord is if the building catches fire.
Therefore, landlords need to make sure the building is up to code when it comes to HMO Fire Regulations, and tenants know what to do in case of a fire.
The design of an HMO and construction must restrict the spread of fire as much as possible, as well as providing a means of escape.
Having a working fire alarm is just the start and helps create an environment that is prepared in case of a fire.
You need to make sure the electrical circuits, fittings and equipment throughout the house are in good working condition.
You must also check on the gas installation and get it serviced at least once a year. While running an HMO, landlords will have to do periodic inspections of the building.
This includes ensuring the communal areas are clear for tenants to escape in case of a fire, making sure there is a fire extinguisher and fire blanket available if the building requires it.
Furnishings also must fit the space to not restrict access to any escape routes.
A proper escape route should allow for occupants to make their way outside to a safe location without having to pass through a higher fire risk area. These areas include the kitchen, bedroom and living room.
We recommend having more than one escape route to ensure the highest potential of everyone getting out safely.
It's also recommended that you don't include any flammable or combustible materials in an HMO. For example, portable gas or paraffin heaters, paint, thinners, LPS cylinders, paraffin or petrol.
It’s your job as a landlord to reduce the risk of a fire in your HMO as much as possible.
Curious about automated data extraction from documents?
HMO Licensing
Not every HMO landlord needs an HMO Licence.
But, if you have five or more people, some or all residents share a toilet, bathroom or kitchen, and at least one pays rent, you’ll most likely need a licence.
In the UK, there are three types of HMO licences: Mandatory HMO licensing, Additional licensing and Selective licensing.
Mandatory Licensing applies to Larger HMOs (7 or more occupants) and is required under all conditions.
Selective or Additional Licensing applies to smaller HMO (up to 7 occupants) and its enforcement depends on the local authority.
It’s also a way for authorities to check in on the quality of your HMO and see if it is up to standard.
Before getting a licence, a local authority must agree that the landlord is fit to hold a licence. As well as, having the property meet the required rules and regulations.
Landlords with many HMOs must have a different licence for each HMO they own, with a renewal every five years.
HMO Licences cannot be transferred, so if you buy an existing HMO, you'll need to apply for a new one.
If the HMO requires a licence and doesn't have one, landlords can be liable for an unlimited fine.
Conclusion
Owning an HMO can be an excellent investment providing good rental income and capital growth.
But, without following the correct regulations, you may end up with some hefty fines.
That’s why it’s important to understand the HMO regulations in your area and keep up to date on any future changes.
About HMO Architect:
HMO Architect is an Award-Winning architectural company based in Cambridge with offices in London and Liverpool.
Founded by property investor Ryan Windsor and fellow property investor and Architect Giovanni Patania, it specializes in converting single family homes and other complex developments into HMOs.
With over 16 years of investment experience, HMO Architect’s mission is to help clients maximise returns while creating meaningful spaces and improving standards of living. Please speak to us today.