Houses in Multiple Occupation (HMOs)

A HMO is defined as a house where multiple unrelated tenants have exclusive access to their rooms but share common areas such as kitchen and bathroom.

The tenants may all sign one and the same joint tenancy agreement, or each may have their own tenancy.

Properties of 3 or more storeys and occupied by 5 or more unrelated occupants are required by law to be licenced by the Local Authority. Different local authorities have different rules regarding properties of less than 3 storeys or less than 5 occupants so it’s important to check the rules for your area. Licencing requires adhering to rules regarding safety standards.

Tenants in this type of property include for example students, tenants on benefit support, tenants placed by the local authority, asylum seekers and of course working people.

Generally speaking such properties require more hands-on management by the landlord but there is often a high rental return which is why such properties are attractive to property investors. Sometimes the entire property can be leased to a specialist property management company which then assumes responsibility for letting and maintaining the property.

ibmco has a panel of lenders who will provide Buy to Let mortgages for HMO properties and welcomes enquiries.

In 2018 further legislation is expected which, if the government’s consultation document is followed, will extend licencing requirements in England to any property occupied by 5 or more tenants if more than two of them are unrelated irrespective of the number of storeys. Requirements may include minimum room sizes as well as stricter checks on landlords applying for licences and rules governing refuse disposal. We await further developments.

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