HMOs have seen a steep rise in popularity over the years, especially around our busiest city centres. This is because they offer a great investment opportunity for landlords and prioritise space in densely populated cities. As more and more landlords are jumping on the HMO bandwagon and seeing admirable returns, you might be wondering how to convert your property into an HMO, too.
So if you:
Have heard of HMO, but aren’t sure what it is;
Are interested in joining the market;
Are wondering how to turn your property into an HMO,
Then read on!
What is HMO?
HMO stands for house in multiple occupation. HMOs are properties that have been rented to at least three tenants who aren’t part of the same household, using shared facilities (kitchen, bathroom, etc.).
The word ‘household’ can be slightly misleading when talking about HMOs, but just keep in mind it’s an umbrella term used to describe different types of renters. Households are defined as:
A single person
A couple in a relationship
A married couple
An entire family
So, for instance, you might have three unrelated single people living in a property, which would count as three households, making it an HMO property. It should be noted that if you, as a landlord, live on the same property as two of your tenants and share facilities, your property won’t be classed as an HMO.
The benefits of HMO
HMOs can maximise investments, with current estimates indicating that HMO landlords can yield 8% more profits than traditional single-let landlords. No wonder so many landlords have opted for HMOs!
HMOs also tend to generate a more stable income, even if some problems arise with tenants. For instance, if one of your tenants leaves or goes into rent-arrears, your pockets won’t be affected as dramatically, as you will still have other tenants paying rent in the property.
While converting your property into an HMO can be a pricey procedure, the yields are almost always worth it. With housing being a valuable commodity in our largest cities, consumers have an increasing need to find affordable rental accommodations. HMOs can directly benefit from this market because they offer smaller spaces for lower prices. This also makes them perfect for towns and cities that have a strong student community. As the rates of university attendance continually increase, HMOs will continue to grow in popularity.
How to convert your property into an HMO
As a landlord, going the HMO way seems like a no-brainer. However, it often takes time and effort to convert your property into an HMO. Your property requires a number of changes to comply with the government regulations for HMOs, some of which can be confusing. Luckily, we’re here to help guide you through the murky waters of regulation and red tape.
Since 2018, the UK government has required you to hold an HMO licence for any residency with at least three tenants from two different households. This is a significant change from the original law in the housing act of 2004, where you would only need a licence if your HMO was at least three storeys high and had more than three residents.
Regardless of the size of your HMO, you’ll still have to go through this bureaucratic process. Thankfully, they are quite easy to apply for! You just need to contact your local authority, and they will send you a form to fill out. If you have a large HMO, your property will need to be inspected to ensure it is safe and fit for multiple occupants.
Regulations for HMO
As is common in the private rent sector, there is often a fair amount of red tape you need to cut through before capitalising on investments. And as always, the regulations are tricky to navigate, as there is so much to keep in mind. So, we’ll go over precisely what regulations you should follow for a successful HMO.
Keep in mind, before renting a property, you will have to have the proper certification as evidence that your property conforms to government standards. Have a glance over our article on what certificates you’ll need to rent!
HMO fire regulations
Fire safety is essential regardless of the type of accommodation, but even more so in terms of HMOs. Due to the construction type of HMOs and the number of tenants living in them, there are even more factors to consider regarding fire safety. For instance, you will need to ensure that the construction of the HMO limits the spreading of fire and there are enough detection systems throughout the property. Some things to keep in mind:
Alarms and detection systems – They must be fitted in all risk rooms, including bedrooms and kitchens. These include fire alarms and carbon monoxide alarms. Every alarm should be linked so all tenants are notified of a fire.
Landings, halls and fire exits kept clear – There should be no obstructions between your tenants and the exits. Tenants should know exactly where the fire exits are. Ensure that all exits can be unlocked internally without a key.
Fire-resistant doors – For all risk rooms, fire-resistant doors which contain the flames for at least 30 minutes should be installed. This is to limit the spread of fires. Mark the fire door with a notice that it must remain shut.
Fire blankets provided – Fire blankets can deal with small fires and are often installed in the kitchen. You should make sure that your tenants know how to use them properly. Specify that exiting the building should always be the priority for larger fires. Once they are outside, call the fire service.
There’s a possibility that a risk assessment might require emergency lighting and fire extinguishers, although this depends on the property.
Gas safety certificates
If your property uses gas fittings, you will also need to supply a gas safety certificate to your local authorities.
HMO heating regulations
Heating regulations for HMOs are relatively straightforward. Every room must have access to heating, regardless of the heating method. You must also make sure that the bathroom and kitchen have a constant hot and cold water supply.
While it isn’t needed, we recommend getting cover for your boiler. This ensures that your tenants live in constant comfort, and if there are any problems, they aren’t left without hot water or heating for long periods of time. There are even boiler cover contracts, specifically for landlords.
HMO electrical regulations don’t differ too much from traditional style rents. You must ensure that electrical safety complies with the national standard. Since trained electricians carry out almost all electrical work, thankfully, this isn’t something you need to worry about too much.
However, you must ensure that each electrical installation is inspected every five years by a professionally trained technician. You will receive a report from each inspection, which details the results and the date of the next inspection. This report is important, and you’ll need to give this to:
The local authorities if they request a copy. The report needs to be supplied within seven days.
To existing tenants in the property, within 28 days.
To new tenants before they occupy the property.
Prospective tenants may ask for the report, and it should also be supplied within 28 days.
Keep a copy for the specialist on your next electrical inspection.
If a technician finds a problem with the electrics, you have to fix the issue within 28 days. You’ll need written confirmation of the completed works and will need to hand a copy to your tenants and local authority.
Introduced alongside the licensing changes of 2018, HMO landlords now need to be more careful of the size of the spaces they rent out. Generally, this means that each one of your tenants has enough space to live comfortably. However, the requirements can change depending on the type of household you’ll be renting to. This is based on the size of bedrooms or sleeping accommodations.
For a single person over the age of 10, they should have at least 6.51 square metres.
Two people over 10 using the same accommodation must have a minimum of at least 10.22 square metres.
For a person under the age of 10, they will require 4.64 square metres.
You should make sure that any room under the size of 4.64 square metres isn’t used as a sleeping area by any means. You must also notify the authorities if your room is under 4.64 square metres.
Other regulations to keep in mind
Now that we’ve gone over the bulk of the most important regulations, we need to touch on a couple of smaller but no less essential regs.
Every sleeping accommodation must be fitted with a lock.
If any pest control has been completed at the property, you will need to keep these records.
HMOs must remain fit for habitation. You must ensure there is no overcrowding and that the property is properly ventilated. If found guilty of overcrowding, you may suffer a large fine.
Depending on your local authority, there may be other safety checks and regulations that you need to adhere to. It is always best to check with them first, but the regulations listed are usually standard regardless of county and council.
Check your local authorities regulations
While we have gone over many common regulations, it is critical to do your own research. You should check with your local council as a starting point, as regulations can change based on location. Many council webpages will usually have a dedicated page for HMOs. To find your local council, click here!
Now that you know all the regulations you must adhere to, it is time to make sure it is HMO ready. This can be arduous work and can take time. However, you’re here for the long run; rest assured the returns will be there!
In most cases, professionals will need to be brought in to do the renovations correctly. This can include plastering new walls and converting spare rooms into bathrooms, reception areas, or living areas.
We can help in these areas, as we cover most services you expect to see within HMO conversions. These include, but aren’t limited to:
For the smaller, but no less important jobs, we also offer electricians and locksmiths who will make sure your HMO is up to government standards. Plus, if you need to check if your electrics comply with government regs, we have an EICR service just for that!
All of the experts we work with have gone through the proper checks. They are qualified for any work that needs to be done, and we’re sure you’ll be happy with the results!
HMOs are becoming ever more popular, with no indication of slowing.
HMOs tend to come with a host of benefits, including maximising profits for a single property.
In order to create an HMO, you must ensure that you follow the proper regulations.
While converting to an HMO can be stressful, it will always be a worthwhile investment.
Disclaimer: Every piece of information here is meant for informational and educational purposes only. So please, do not use this as a definitive legal basis. Fantastic Services encourages you to seek authority professional counsel before you decide to act upon what you have read. For more information, check ourdisclaimer.
Have you ever thought of starting an HMO? Are there any aspects of refurbishment that worry you? Please feel free to share with us, in our comment section below!