Houses in Multiple Occupation (HMOs) are a highly popular form of tenure in the UK, with around 500,000 in England alone.
For landlords, they offer the potential for higher returns. While for tenants, they provide flexible and cost-effective shared accommodation.
However, despite their attractions, HMOs are much more complex than a standard Buy-to-Let. There are increased licencing requirements, strict safety standards and day-to-day management can be more involved.
While landlords are ultimately responsible for their own compliance, brokers are often called upon for advice about how to navigate the HMO regulatory maze.
To help you answer those questions, we’ve put together a useful overview of the key requirements your landlord clients need to be aware of.
What is an HMO?
An HMO is defined as a property let to at least three people from more than one household who share facilities such as a bathroom and kitchen.
They tend to be popular with students and young professionals as they offer the privacy of having your own self-contained room but, since the property is let out bedroom for bedroom, they are typically more affordable than renting a house or flat.
Do you need a licence to let out an HMO?
The HMO licencing regime is complicated, and the rules and regulations can vary from local authority to local authority.
However, in England and Wales, all ‘large’ HMOs need what is called a mandatory licence. A large HMO is a property where five or more unrelated people from multiple households live and share facilities such as a kitchen or bathroom.
In order to qualify, landlords must meet certain safety and management standards and the licence itself lasts a maximum of five years.
Are there any other licencing requirements?
Yes, there can be.
Some local authorities have introduced additional licencing schemes for smaller HMOs (three or four people sharing) where they feel they need to drive up living conditions and management standards.
To check what the local requirements are in their area, landlords should check their local authority’s website.
How do you apply for an HMO licence?
All applications for an HMO licence, no matter which one, should be made to the relevant local authority, usually online.
To obtain a licence, landlords must meet various safety requirements, including proof that they have an up-to-date gas safety certificate, the electrical appliances are safe, smoke alarms are fitted and tenants have a written statement of the terms of occupancy.
Do HMOs need planning permission?
In many cases, landlords can convert a house or flat (C3 use class) into an HMO (C4 use class) of up to six occupants without needing planning permission.
However, permission is needed in areas where the local authority has introduced an Article 4 direction.
Are there minimum room size requirements for HMOs?
There are minimum room size requirements for HMOs in England. for two adults sharing, it must be at least 10.22sqm.
However, these are just the minimum standards. Local authorities can set their own standards, so it’s vital landlords check the requirements in their area.
What are the management regulations and requirements for HMOs?
By law, landlords must ensure that the property is safe, well maintained and that the shared areas are in good condition. They also have a responsibility to ensure that the required safety checks are carried out on time, they provide adequate waste disposal facilities and that they maintain the water and drainage systems.
What types of tenancy agreements are required for HMOs?
Landlords typically use sole tenancies for each individual room, especially where the tenants don’t know each other beforehand.
However, in some cases, such as if the landlord is letting the property to a group of friends, a joint tenancy agreement may be more preferable for both parties.
What are the record-keeping requirements for HMO landlords?
The record keeping requirements are stricter for HMOs. Landlords must ensure that they keep records of gas and electrical safety certificates, tenancy agreements, fire alarm logs, deposit protection information and, of course, the licence itself.
It is important landlords keep these to hand for inspections or for when they come to reapply for their licence. Without them, it may hold up or even jeopardise an application.
Should landlords seek specialist advice?
HMO licensing and regulation can be complex, so most landlords could benefit from specialist legal advice to navigate the process, even those with experience.
As for finance, the HMO mortgage application process is more complex than a standard Buy-to-Let, so landlord should seek out a specialist broker or specialist lender who understands this area of the market.
