HMOS 101

As a specialist HMO management company, we are no strangers to Houses in Multiple Occupation, or HMOs. We see all types and sizes of them; some need more “love and attention” than others when they come to us and some are beautiful, boutique HMOs, that have clearly had a lot of design and thought gone into them and a lot of time and money spent on them. These types of properties can offer fantastic investment opportunities, but they are not without their unique challenges. Here, in this article, I will share my experience and advice for landlords considering HMOs, from years spent “at the coalface” so to speak!

Firstly, let’s start with the basics. An HMO is a property that is rented out to three or more tenants who are not from one household (family unit, romantic relationship, related by blood or marriage etc.).

HMOs require additional management and compliance measures, such as fire safety and licensing requirements. So, for those of you “of an age” to remember the TV game show “3,2,1” (cue Ted Rogers’ voice) the definition of an HMO is – 3 or more people, from 2 or more households, equals 1 HMO.

One of the biggest benefits of HMOs is the potential for higher rental yields. With multiple tenants paying rent, landlords can often achieve a higher monthly income than with a single tenancy property. However, this comes with the responsibility of managing multiple tenancies and ensuring that the property is well-maintained.

When considering an HMO investment, it’s important to research the local market and demand for shared accommodation. Look for areas with a high population of young professionals, students, or key workers who may be looking for affordable shared housing. It’s also important to consider the competition in the area, and whether your property can stand out, attract tenants, and differentiate itself in the market.

One of the biggest challenges with HMOs is the additional compliance requirements. Depending on the size and location of the property, you may need to obtain an HMO licence from your local authority. This can involve meeting specific safety standards, such as fire doors and alarms, and ensuring that there are adequate facilities for each tenant (for example, bathrooms and kitchens) and this will change depending on the number of tenants that you have in your HMO. HMOs are compliance and regulation heavy property models because they are considered to be higher risk than other models.

In addition to standard HMO Licensing, you will also need to be aware of any selective or additional licensing in your area and, depending upon the number of tenants you plan to have in your HMO, planning permission may also need to be sought. Research is key – be sure to be diligent and, take a good look at your local council’s website for licensing applicable in your area.

It’s also important to consider the management of the property. With multiple tenants, there may be more maintenance and repair issues to address, and it can be more challeng ing to resolve disputes between tenants

It’s important to have a clear management plan in place, and to ensure that tenants understand their responsibilities in maintaining a safe and comfortable living environment.

Another consideration when managing an HMO is the type of tenancy agreement to use – ASTs are pretty standard but some landlords like joint and several contracts and some like individual room only contracts. Make sure that you understand the difference between the two and what one offers over the other.

In our experience, successful HMO management requires a hands-on approach and a commitment to ongoing maintenance and compliance. Regular inspections and communication with tenants can help to identify and address any issues early on and can help to build positive relationships with tenants.

Ultimately, HMOs can be a great investment opportunity for landlords who are willing to take on the additional management and compliance requirements. With careful research, planning, and management, landlords can achieve high rental yields and provide safe and comfortable shared housing for tenants.

At our property management company, we have a wealth of experience in managing HMOs and ensuring compliance with regulations. We work closely with our landlords and their tenants to provide a high-quality service. If you’re considering an HMO investment, don’t hesitate to get in touch with our team to discuss how we can help you achieve success.