What is a HMO?
A house that is rented out to more than three people who are not considered a family or part of one “household,” but who live separately while sharing a kitchen, a bathroom, or other amenities is referred to as a HMO, sometimes known as a houseshare.
What are the advantages of being a HMO landlord?
The primary benefit of turning a property into an HMO is that rental returns frequently exceed those of a single-occupancy home. On average, the typical rental yield for conventional buy-to-lets is about 6.5%, but it rises to 9% for HMOs.
Additionally, if you keep the HMO in good condition, you might also be able to charge a higher fee for services like cleaning, gardening, internet, and satellite TV.
But it’s not always for everyone…
There can be certain drawbacks, namely relating to the practicalities of managing tenants. Tenant turnover in HMOs tend to be higher compared with single occupancy lets; this, coupled with the fact that you could be dealing with five or more tenants at once, means you’ll need to dedicate lots of your time to management tasks.
Alternatively, you can enlist the help of an agent like Belvoir to take away time consuming landlord responsibilities.
What are HMO Landlords responsibilities?
In the UK, a specific licence known as a large HMO is necessary if you are a landlord who lets out an HMO to more than five individuals within the same property.
This licence is valid for five years. More than five persons must reside independently within the building, share a bathroom or kitchen, and at least one resident must be responsible for rent in order for the building to qualify as a large HMO.
Owners of HMOs with five or more occupants must ensure that:
- There are sufficient waste bins provided
- The house is not overcrowded – According to Section 325 of the Housing Act of 1985, there is overcrowding if there are two or more people who are ten years of age or older, of opposite sexes, and who are not married to each other who must sleep in the same room.
- Electrics are inspected every five years,
- Annual gas safety inspections are performed
- Cleanliness and decent maintenance are present in the common spaces and utilities.
- There are adequate fire safety precautions in place, including functional smoke alarms.
- There are sufficient kitchen and toRilet facilities.
- This may also apply in HMOs with three or more residents in some municipal districts. More restrictions may be added by councils. Consult the local council.
Final thoughts:
When it comes to deciding whether to be a HMO landlord, you essentially need to decide whether a prospective rise in rental yields is worthwhile. If you’ve made up your mind that it is, you might think about asking a knowledgeable professional for advice on what to do next.
Belvoir can help with offering professional advice – get in touch with a member of our team today to discuss your next steps.
