There are many different types of properties and tenancies that people can choose from these days. While some people are looking for family accommodation others want to rent a flat or house for just themselves or as a couple with a partner. Another type of tenancy that has become common is HMO or House in Multiple Occupation. There are many people that tend to live in an HMO these days, such as students, professionals that need to live close to work and single people on benefits amongst others.
When a property is officially shared by 3 or more people who are not related, this is known as HMO or a House in Multiple Occupation. It is where the tenants of the property share facilities such as the bathroom and kitchen but obviously have their own rooms for sleeping. Many students, for example, live in HMO when they rent a room in a large shared house with a number of other students. This is because the occupants of the house are not related, they are all sharing facilities and there are three or more tenants in total.
It is worth bearing in mind that the homeowner and his/her family do not count as a qualifying person when it comes to determining whether you are living in an HMO. This means that if you are sharing with the person that owns the property along with one other person that is not related to either of you, you are not living in an HMO. However, if the homeowner lives there are there are two other people in addition to you who are unrelated to either of you, then it can be classed as an HMO.
There are a number of property types that commonly operate as HMOs whereby they are shared by three or more unrelated people who class it as their main residence. Some of the most common ones include:
Another thing to remember is that in order for a property to be an HMO the landlord has to have an HMO license. The Licensing of houses in multiple occupation is dealt with by the local authority and it is designed to ensure that the property is properly managed and that certain safety standards are adhered to. The HMO licence is not the same as a tenancy agreement and is a separate entity. Tenants who want to make sure that the property that they are living in has an HMO license can either speak to the landlord directly or contact the local authority for more information.
As mentioned previously, it is necessary for a landlord to get a license from the local authority before he or she is able to offer HMO accommodation. However, there are certain procedures that the council will have to follow before they will issue a landlord with a licence. Some of the steps that the local authority will have to go through include:
The local authority will also ensure that the landlord is abiding by House of Multiple Occupation rules before issuing a license. Some of these rules include:
It is also important to remember that there are responsibilities on the tenants’ side when it comes to living in HMO, which is something that everyone living in the property needs to bear in mind. Some of the key responsibilities for tenants in HMO include:
As with any other tenancy type, it is important that you are familiar with your tenancy agreement and that you take on board any responsibilities that have been attributed to you within the agreement.
Many landlords decide to go for HMO properties, and this is for a number of reasons. One of the key ones is that unlike having a single tenant, if one tenant in the household leaves there are still others that can continue paying their rent so the landlord doesn’t suffer a total loss of rental income for a period of time. Another reason why a landlord might decide to opt for HMO is because the property that they have may be too large to easily get tenants under a standard tenancy – for instance demand for five or six bedroom houses in the area may not be particularly high. Using the property as an HMO means that the landlord can more easily rent it out.
If you are considering turning your property into HMO, you should first contact the local authority in your area. There are different rules with regards to House in Multiple Occupation planning depending on the property, the circumstances and your intended plans (e.g. how many tenants you are looking to rent to overall at any one time). Your local authority will then be able to advise you with regards to whether any specific planning permission is required for you to move forward with your plans.
Another thing you will need to do, unless you are a cash investor, is to look at HMO mortgages in order to get your plans underway. As with any other type of mortgage, there are various different mortgage options available and the interest rates can vary from one lender to another. With this in mind, you should make sure you compare the rates on the various mortgage products so that you can get the best deal possible.
The LTV percentages can also vary from one lender to another, so you will need to work out exactly how much you need to borrow and then try to find a lender that offers a suitable LTV based on your needs. With these mortgages, you may also find that there are stipulations in place from the lender with regards to the maximum number of tenants that they are willing to accept if a loan is offered to you. It is worth noting that not all lenders offer HMO mortgages, so this is something that you will need to look into in the event that you are planning to provide HMO tenancies. Another option is using a specialist mortgage broker, who should already have strong industry links with a range of lenders that offer this type of mortgage. He or she will them be able to conduct research in order to find the most suitable mortgages and lenders based on the amount you need to borrow.
Related: The Pros and Cons of Living in HMO