What is an HMO?

12/11/2019

A house in multiple occupation (HMO) is a property rented out by at least three people who are not from 1 ‘household’ (for example a family) but share facilities like the bathroom and kitchen. It’s sometimes called a ‘house share’ or ‘co-living”.

If you want to rent out your property as a house in multiple occupation in England or Wales, you must contact your council to check if you need a licence.

You must have a licence if you’re renting out a large HMO in England or Wales. Your property is defined as a large HMO if all of the following apply:

1.       Rented to 5 or more people who form more than one household

2.       Some or all tenants share toilet, bathroom or kitchen facilities

3.       At least one tenant pays rent (or their employer pays it for them)

Even if your property is smaller and rented to fewer people, you may still need a licence depending on the area. Check with your council.

It is worth noting that any HMO of seven or more people needs planning permission regardless of location. In most cases, an HMO with up to six residents does not need planning permission, as it is a permitted development right.

Most HMO’s will also require thirty minute fire safe doors to the ‘risk rooms (e.g. kitchen’s, living rooms, basements where there are fuse boards) though some councils require doors to be installed on every bedroom too.

Smoke alarms need to be mains wired and depending on the borough they can be radio interlinked or they need to be physically connected with a mains panel.

There are a myriad of other things which may or may not need to be done before an HMO can be granted so it is worth checking with your local council or a professional company as to what is needed. Whatever you do, don’t try and get away with not applying for a license, as you could be opening yourself up to prosecution, fines or even a jail term if someone was to be hurt due to lack of compliance.

Once you have obtained your license, it is held for a maximum of 5 years, and you will have to meet minimum criteria if you are to be granted with and retain your license.

1.       The house must be suitable for the number of occupants (this depends on its size and facilities

2.       the manager of the house – you or an agent – is considered to be ‘fit and proper’, for example, they have no criminal record or breach of landlord laws or code of practice

3.       send the council an updated gas safety certificate every year

4.       install and maintain smoke alarms

5.       provide safety certificates for all electrical appliances when requested

The council may add other conditions to your licence, for example improving the standard of your facilities. They will let you know when you apply.

In 2018 the government tightened up the legislation regarding HMO’s. They had discovered that many landlords were providing sub-standard, overcrowded and potentially dangerous accommodation and as a result, failure to comply with these standards can now leave you liable for an “unlimited fine”. An HMO property can be at risk to void periods. All landlords should take potential void periods into account when they do their sums, but with HMOs, the risk is much higher, with several independent tenants in one property, you’ll likely have to deal with tenants moving on more often. 

At London Shared, we pride ourselves in complying with all government standards. We will take care of the HMO application and rent your home off you for a fixed long term contract that is in line with market rates. We guarantee rent payment each month regardless of whether the rooms are empty. The responsibility of managing the property, the tenants and the HMO licence becomes our responsibility.

Managing an HMO brings yields a good return on investment; however, is it not particularly easy to maintain. HMOs are heavily regulated, and most need a licence. With licensing, comes extra costs and demands on a Landlords time. Is it worth it? It can be, but you need to understand all the potential risks and obligation on you, the landlord. You will also need to consider whether you can make the investment both in money and time.

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