HMO properties continue to be an appealing choice for landlords as they offer lots of advantages.
For one, they are often more profitable than other types of rentals.
However, these benefits come with added demands put in place to protect renters. How can you understand and deal with these requirements as a HMO landlord?
This guide covers everything you need to know.
Let’s start with the basics. HMO stands for houses in multiple occupation. Put simply, a rented house shared by multiple people or ‘households’ which can consist of a single person, families or cohabiting couples. In order to work out if your property is HMO you will need to know about the different types of HMO housing.
There are several types of HMO properties:
To be considered HMO a property must…
The key thing to remember is that properties tend to be HMO if the people living there are not related and share toilet, bathroom or kitchen facilities. Separate tenancy agreements are also a good clue.
As the landlord of a multiple occupancy home, you are subject to additional legal responsibilities. It is important to understand these legal obligations as failure to do so can result in some hefty fines of up to £5000.
Here’s a list of the legal requirements as a HMO landlord:
It’s not just landlords who have to follow the rules. Tenants are also under obligation to:
Another thing to consider as an HMO landlord, is whether your HMO property needs a license. Some multiple occupancy HMO’s legally require a license to make sure the property is being managed correctly.
You will need a license if:
If you’re still not sure if your HMO property needs a licence, you can check with your local authorities. Some councils require all private landlords to apply for a license so it’s worth a check to avoid any unwanted fines.
A HMO license application form can be requested from your local council and the application can be made by a landlord or property manager. Unfortunately, there is normally a fee, the amount is set by individual local authorities and it is non-refundable regardless of the success of the application. Once issued, the licence will last up to five years.
You will need to inform several ‘relevant persons’ about your application and provide their details to the council.
Here are some of the things councils look at when making a decision whether to grant a HMO license:
If the council decides not to grant you a HMO license, it may be possible to use a different license holder such as the property manager. You will usually be granted a month if you decide to try and persuade the council to change their decision. The council will always give you the reasons behind their ruling.
The council also has the power to revoke a license of they believe the conditions are being violated. You will have two weeks to respond and a month to appeal to a Residential Property Tribunal.
Breaking the terms of the licence also risks fines of up to £5000. If the conditions of your license have been broken and your tenant gets Housing Benefits, the council can apply for a Rent Repayment Order and reclaim rent paid for the time the HMO was unlicensed.
As a landlord, you are also able to revoke your license if you wish to change license holders or cease to run the property as a HMO.
Remember it is a criminal offence to disobey licencing laws and without a required license you are at risk of repaying up to twelve months rent and fines of up to £20,000! Without proper licensing, a Section 21 Notice will not be valid and you may be unable to evict tenants.
Hopefully, with the help of this guide, you now have all the information you need to be a responsible, capable HMO landlord and you won’t get caught out by any hidden legal requirements. That being said, managing a HMO property isn’t always a walk in the park. With so many tenants under one roof, vital tasks like managing inventories can prove an arduous task. Luckily, No Letting Go provides fuss-free inventory services via cutting-edge technology, along with a whole host of assistance plans to avoid disputes and make the process as simple as possible.
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