What should I be aware of with HMO properties?
In general HMO properties are seen as bigger income generators for investors/landlords which is generally true, BUT many considerations need to be taken before taking on a HMO property. Though yields are higher with HMO properties compared to single lets, the additional set up and management costs need to be weighed up. Investors will have a much higher initial set up cost with the requirements of fire doors, emergency lighting, fire detectors etc. Then on-going maintenance costs and management time and costs will also be much higher. For the above reasons many people feel that HMO properties are for more experienced investors/landlords.The Official Definition of a House in Multiple Occupation: In the 1985 Housing Act the definition of a “House in multiple Occupation” is a “house which is occupied by persons who do not form a single household”.
Basic Qualification Overview of an HMO, (though the full legal qualification is very complicated):
- A house or fat with 3 or more non-related tenants.
- A house or fat that has been split into bedsits with tenants sharing kitchen and bathroom, but having exclusive use of bedroom.
- Students living in shared accommodation.
- A multi-let house with 3 or more stories.
- Walls and ceiling plasterboard are required to be double thickness.
- Requirement for self closing fire doors on all habitable rooms that lead onto the hall and stair well.
- Interlinked fire detection system.
- Emergency lighting in all exit routes.
- Fire extinguishers and fire blankets.
- Above are the main requirements in additional to standard single let requirements like gas/electric certificates etc, but contact your local housing authority for full list.
- A HMO property with 3 or more stories.
- A HMO property with 5 or more tenants.
- Tenants tend to be more transient, so higher void periods are possible.