House in Multiple Occupation (HMO) represents a property with 3 or more residents that aren’t part of a single family or household. This is a modified definition of HMO from the Housing Act of 2004. The house will have split bedsits for each resident, and each of them will have a different agreement with the landlord. For a household to be considered an HMO, it should be mainly used to accommodate tenants and as residents should use it as their principal residence.
As a landlord, it is your responsibility to register the rented property as a House in multiple occupation to your local authority. Once notified, the local authority will access the living space for all the tenants to see if they are being handled properly. After the assessment, if you are found to be maintaining the property efficiently, you will be giving an HMO licence. If you are unsure if you need an HMO license, it is recommended to contact the local council to check if you require one.
You will not need an HMO licence if you are:
- Living with two other lodgers in your property
- A care home or a bail hostel
- The property is flat share
- The residents of the property are long leaseholders or freeholders
- Purpose-built blocks or flats
Responsibilities of the Landlord in HMO
There are responsibilities for the owner to maintain the property properly, so it is fit for every resident to live comfortably. In doing so, landlords have to fulfil these criteria.
The house in question has to have proper fire prevention measures implemented so it can prevent uncontrolled fire related accidents and provide a safe way to deal with one. There should be fire alarms, fire escapes, fire resistant door and windows. This assessment is carried out by an accredited professional. Electrical inspection of the house is necessary every five years.
Uncrowded living space:
The house should provide decent living standards for the residents. It should not be unreasonably overcrowded for every resident to live in a peaceful environment. There should be adequate cooking and washing facilities that should support the resident without the need to take turns.
An inspection will assess what requirements need work. This assessment can entitle you to get HMO renovation grant for fire security, amenities and energy efficiency work. These grants are different based on your location so that you will need more information about the grants.
These are requirements that have to comply with Housing Health and Safety Rating System (HHSRS). If you are unable to bring the house up to HMO standards, you may land yourself in big trouble.
Benefits of House in Multiple occupancy for landlords:
- There is often higher return on your investment with HMO
- Higher rent yield can be expected than single tenancy
- Unlike single residency, you do not have long void periods without tenants
- Have more control over your property.
If you have an eligible house for HMO, with a bit of added amenities like broadband, TV, phone lines and regular cleaners you can attract many tenants to your property. Students, new couples are highly interested in these type of properties so you can make a decent profit all year around with a house in multiple occupancy licenses.