What Are the Rules for Letting HMO Properties and Do You Need an HMO Licence?
Guildford Borough Council successfully prosecuted a landlord recently for operating a house in multiple occupancy (HMO) without the required licence. Inspectors found that the building did not meet HMO standards and that failing, combined with the lack of licence, saw the landlord fined more than £9,000. But what are HMO properties, what are the rules for letting them and do you need an HMO licence? Find out more in our guide.
What is an HMO?
An HMO is also known as a house in multiple occupancy, and is defined as such if there are three or more people living there from more than one household, and tenants share bathroom, kitchen or toilet facilities with another household. You can also rent out a large HMO, which includes five or more tenants from more than one household, with more than one household sharing kitchen, bathroom or toilet facilities.
To help decide if you rent out an HMO property, you should know that a household consists of a single person, a couple who are either married or living together, relatives such as aunts, uncles or siblings, and step-parents and step-children.
This means that two single friends sharing a flat with two separate bedrooms are not living in an HMO, but two couples sharing a two-bedroom flat are in an HMO.
The most common types of HMO property are shared flats or houses where the sharers are not related, houses that are split into separate bedsits, Bed and Breakfasts that cater for longer-term residents rather than simply just holidaymakers, hostels and, sometimes, student accommodation. Although properties owned by universities and colleges are not usually classed as HMO properties.
You need HMO licences for large HMOs, and some councils also require them for small HMOs too. If you are in any doubt as to whether you need to apply for a licence, you should contact your local council straight away. They will also be able to give you advice on how to apply for an HMO licence and what is required of the property for them to issue it.
According to research by Direct Line for Business, the average cost of an HMO licence stands at £591, with some landlords reporting paying as little as £55 and as much as £1,150. The cost can depend on the location of the house, the number of rooms in the property, the number of occupants and the type of property too. There is no uniform HMO licensing policy across the country, as each council sets their own rules.
Once you apply for an HMO licence, you will quite often face an inspection by the council before they grant it to you. They will look to make sure the property is in good condition, with relevant fire safety measures, gas and electric checks are up to date, there are enough cooking and washing facilities for the number of occupants, as well as storage and disposal solutions, and that the shared areas are clean and in good repair.
If it is discovered that you did not hold a relevant HMO licence when renting the property, the council can fine you, and your tenants may be able to claim back up to 12 months’ worth of the rent they paid to you.
Responsibilities When Renting Out an HMO
There are many responsibilities when renting out an HMO. As well as meeting all of the basic principles for being granted a licence, you also need to attend to all repairs to communal areas, as well as to the structure and exterior of the home, including windows, walls and gutters. You also have to look after water pipes, gas pipes, electrical wiring, radiators, water heaters and all of the washing facilities.
Landlords and letting agents need to carry out right-to-rent immigration checks on all adults living at the property, and there are minimum dimensions allowable for the bedrooms that you must stick to. These are laid out by the government, but some councils require larger minimum spaces than the official guidance demands. It is worth checking with your local authority before you apply for a licence. Here are the government minimum bedroom dimensions:
● 6.51 square metres for a person aged ten or over.
● 10.22 square metres for 2 people aged ten or over.
● 4.64 square metres for a child under ten-years-old.
Pros and Cons of Letting HMO Properties
There are many rules to stick to and additional costs involved when renting out HMO properties. In addition, the nature of renting to so many different people at once can mean you spend a lot of time advertising and filling rooms, and the chances of tenants falling out with each other are greater than in a single let. For these reasons, HMOs tend to take up a lot more of your time with management issues.
However, the fact that you can make a significantly better income through these properties is a definite tick in favour of letting HMOs. They are also much easier to let during a downturn in the economy when people look to house share in order to save money, and it is easier to replace one single tenant of many who doesn’t pay their rent than it is to evict the whole household and have to start again from scratch.
If the advantages are appealing, don’t worry about the problems of management taking up your time. Outsource your property management to Executive Property Management Solutions and we will keep your tenants happy by ensuring your building meets all of the requirements of its HMO licence.