Thinking of changing to HMO?
You could gain up to double your income from a single property!
Landlords face rising expenses. Professional property investors constantly search for a “High Yield” income. Increasingly, landlords and property owners turn to HMO or Houses in Multiple Occupation to maximise their return on investment. The financial rewards of building a HMO portfolio are considerable.
What is a HMO?
HMO – or Houses in Multiple Occupation – under section 254 of the Housing Act 2004, is:
- A property rented out by at least THREE people who are not from the ONE same ‘household’ (e.g. a family) but SHARE one or more facilities, usually the bathroom, kitchen, lounge and dining area. Also referred to as a ‘house share’.
A property is categorised as a HMO where there is “material sharing” of amenities, such as :
- A house split into bedsits where the tenant has sole use of their own private room but shares a kitchen or bathroom and WC.
- Students living in shared accommodation where they have exclusive use of the whole house.
- An owner-occupier with more than 2 lodgers who have a licence to occupy their accommodation.
A property classed as a HMO is not dependent on planning permission but on how
the house is occupied.
HMO Landlord and Managing Agent – essential benefits
Forward-thinking landlords increasingly view a managing agent’s HMO service as a partnership which bring essential benefits that can be relied upon to:
- Maximise property investment and double rental yields.
- Guarantee rental income for five years (if via a leasing scheme).
- Eliminate rental “void” periods with rooms always rented.
- Protect, maintain and fully manage a HMO property 24/7 to the required standards.
- Comply with all necessary and legal requirements, and safety procedures, according to The Licensing of Houses in Multiple Occupation (England) Order 2018.
- Adhere to all mandatory licensing criteria, according to Management Regulations and Inspections under the Housing Health and Safety Rating System (HHSRS)
- Operate complete tenancy management and communication process from initial enquiry to end of tenancy, including, tenant screening and referencing, deposit scheme, contract, inventories, check ins/check outs, regular inspections and rental reviews.
- Provide complete account management with full visibility and control to landlords at all times.
- Run strategic marketing and advertising.
Why more HMO landlords rely on HMO Management
Since the 1990s, increased overcrowding (compared to the ‘bedroom standard’) has spread to an estimated 8 per cent of London households. Overcrowding rates are entirely found in the private rental sector (and social housing). (Survey of English Housing and English Housing Survey – 3 year period ending 2012/13).
- 5 million private rental households.
- 508,000 properties are HMOs.
Department for Communities and Local Government, English Housing Survey 2015-16
- 2,568,815 private rental households.
- 195,230 properties (7.6 per cent) are HMOs.
Department for Communities and Local Government, Local Authority Housing Statistics, 2014
- 23,500 privately rented homes. Census 2011
- 2,600 advertised private rental accommodation. HomeCo Internet Property Ltd, 2018
- 133 properties are HMOs. Freedom of Information Act, Aug 2017.