Considering HMO? by Heather Hilder on June 26, 2023 Considering HMO? How to Convert a Property into an HMO The cost-of-living crisis is impacting everyone, including landlords. This is despite the fact that the UK has seen rapid rent increases over the past year. To maximise revenue from their property portfolios, landlords can consider converting their single let properties into House in Multiple Occupation (HMOs). But how to convert a property into an HMO? What is an HMO? An HMO, also known as a House in Multiple Occupation, typically refers to a large house where three or more unrelated individuals live in separate bedrooms but share common amenities such as the kitchen and possibly a laundry room. It is sometimes referred to as a “house share.” Licensing and Requirements for HMOs All large HMOs, defined by the government as properties rented to five or more people forming more than one household, require a license. However, in many local authority areas, all HMOs (even those with only three tenants) require a license, which is valid for a maximum of five years. Landlords should check with local councils to determine if their property falls within a licensed area. Landlords must ensure that the house: Is suitable for the number of occupants The house manager (the landlord or agent) is a ‘fit and proper person’ Undergoes an annual gas safety check, with certificates sent to the local authority Is fitted with smoke and carbon monoxide alarms that are regularly checked and maintained Has electrical safety certificates for all appliances, with all documentation provided to the local authority upon request There are also regulations related to the living space for tenants, including minimum room sizes based on age and occupancy. Local licensing requirements may have additional criteria that landlords must meet. Failure to comply with licensing requirements in compulsory areas may result in unlimited fines for landlords found renting unlicensed HMOs. Conversion Needs for HMO Landlords must ensure that tenants have sufficient space, that the layout is safe (particularly in terms of fire safety), and that all appliances are reliable and tested. For example, in a three-bedroom house, landlords can consider various options for adding living space: Adding an extension to the rear of the property Incorporating en-suites or galley kitchens into bedrooms Expanding into the loft to create additional bedrooms Enlarging the kitchen to create a communal dining area Converting a garage into additional living space Some of these measures may require planning permission and the expertise of builders. As a result, landlords should seek professional advice from their HMO agent or other specialists to ensure the property is suitable for conversion. Additional Safety Requirements In addition to the annual Gas Safe check and the Electrical Installation Condition Report with test certificates for appliances, all furniture and furnishings must be labelled to indicate compliance with fire resistance regulations. Landlords will also need to install fire doors, ensure tenants do not obstruct them or block fire exits, and have a plan in place for fire emergencies. Installing emergency lighting may also be considered. Landlords should check with the relevant council department, as some local authorities may require additional safety measures. Final Considerations Converting a single let property into an HMO offers an excellent investment opportunity for landlords. However, it is important to note that there are more regulations to comply with and increased risks in terms of finding suitable tenants. Insurance premiums for HMOs also tend to be higher. Some experts believe that HMOs are more resilient to economic fluctuations, as there is always a demand for this type of accommodation, even during a recession. Additionally, if one tenant leaves, the impact on revenue is less significant. At Callaways Estate Agents, we understand the importance of a seamless house sale, especially when converting a property into an HMO. Serving the South Coast, including Falmer, Worthing, and Brighton & Hove, our team possesses extensive knowledge of the local area. We are committed to assisting you in determining the appropriate price for your property and attracting the ideal buyers for your HMO conversion. So if you’re considering HMO, for more info about how we can help, please get in touch with us today.
