Houses in Multiple Occupation (HMOs) are becoming more and more popular, with many investing in them to raise their income. However, there are a host of things you need to know before ‘taking the plunge’.

In this legal Q&A, Commercial Property Specialist Patsy Whitford and the team from Property Loan Market outline everything you need to know to start an HMO.

What is an HMO?

An HMO is defined by the Government as a property that is rented out by at least 3 tenants who are not from the same household but share ‘facilities’ such as the bathroom and kitchen.

An HMO with at least 5 tenants occupying the property is known as a ‘large HMO’.

Why start an HMO?

The Property Loan Market team highlight that “rent payments on HMOs can often be higher than if you were to have a single tenancy that covers the property.

While there can often be more work involved and income may vary as people move in and out – this extra return can be attractive to many landlords. 

We are finding more interest in HMOs as interest rates have risen and landlords want to increase their income.  In addition – difficultly in renting and rising rental costs is driving demand from tenants.”

What are the legal requirements for an HMO?

HMOs have certain requirements which they must meet.

One of which is a valid tenancy. So, any tenancy agreement that is in place must be one that complies with the law.

HMO landlords often opt for an Assured Shorthold Tenancy (AST). This is the most common format of letting property and is usually a fixed tenancy of 6-12 months.

Read the importance of having a suitable AST in place here.

Do landlords need an HMO licence?

All large HMOs to be licenced.

However, the council has the discretion to decide whether small HMOs should be licenced. It is therefore important to speak to the council to find out if your property requires a licence or not.

To apply for an HMO licence, speak to the council most local to the property. Be aware that there is a small fee involved in application and that you’ll require relevant documentation.

Licences are valid for 5 years and need to be renewed after this time. Licences are not transferable, so if you are purchasing an HMO you will need to apply for a new licence.

Do I need planning permission for an HMO?

For small HMOs, generally no, but ‘large HMOs’ of 5 or more tenants will usually require planning permission.

However, a number of councils are implementing Article 4 Directions which will mean if you are changing the use of the property from a residential dwelling (Use Class C3) into an HMO (Use Class C4) you must obtain planning permission.

Simply obtaining a licence will not be sufficient. Almost the whole of Bournemouth is subject to this direction, so it is important to check whether the property is affected by this restriction.

To apply for planning permission, contact your local planning authority through your local council.

HMO advice solicitors

In the full article, Patsy and the Property Loan Market team outline the HMO rules for landlords, what makes a good HMO, how much an HMO costs and much more.

Click here to read it.

At Frettens, our bright Property Team would be happy to assist you with purchasing an HMO, creating a legally-binding tenancy agreement and more.

Call us on 01202 499255 for a free initial chat.