Since January here at Green City we have been preoccupied with renting student properties which are normally HMO Licensed (House of Multiple Occupation). I have recently spoken with a lot landlords that own residential properties and are considering going into the HMO property market.
Before you buy or create a HMO you need to be confident that you will be granted any necessary licences or planning permission from your local authorities.
Generally any property let to three or more tenants who form more than one household and share facilities like a kitchen or bathroom is an HMO.
Mandatory licensing exists for larger HMO’s with three floors or more, let to five or more tenants who are not related. However, some local authorities have introduced selective licensing for smaller HMO’s too, so you need to check with your council to see if you need to apply.
To get a licence, you or the person you have appointed to manage the property, must be a “fit and proper person”. In other words, you must not have any criminal convictions or have breached any landlord laws or codes of practice.
You can apply for the licence yourself, or you can appoint a managing agent to do it for you, but a HMO licence cannot be transferred to anyone else. So if are you buy an existing, licensed HMO, you will need to apply for your own licence, and you will not be able to pass that on to the new owner when you sell it.
You might also need to make several changes to the property itself before the council will grant a licence.
The council will want to make sure that the property is not overcrowded, and that there are adequate bathrooms and cooking facilities and that it is safe for the number of people living there.
You will have to install and maintain smoke alarms on every floor and, depending on the size of the property and number of tenants; you might also have to install fire-fighting equipment such as fire blankets and extinguishers, fire doors and emergency lighting.
You will also need to show you have enough easily-accessible fire escapes for the size of property. You might also have to make some changes to the layout of the property, depending on its size and the number of tenants, to ensure their safety.
In addition, you will have to produce annual gas safety record, supply declarations of the safety of all furniture and electrical items, and have the electrical installation and fixed wiring checked every five years.
The council might grant a licence without visiting your property, but they have the right to visit later. If at any point they decides to restrict the licence to fewer tenants than are already living there, you will not have to evict anyone but you will not be able to replace any tenants when they leave if this means you will have more than the number on your licence.
Failure to meet the conditions of a licence without a ‘reasonable’ excuse could lead to a substantial fine and you might have your licence revoked.
In addition to all of the above, you might also need planning permission for “change of use”, especially if
you intend to run your property as a large HMO. You might even need planning permission to convert an existing small HMO to a large HMO with six or more tenants.
As councils are often inclined to restrict the number of HMOs in certain areas, it would be wise to check the necessity and likelihood of gaining both planning permission and a licence before you invest.
Please feel free to contact me, if you have any concerns or you just want some general advice about lettings and property management.
Chamak Digwa, ARLA Licensed Agent
Green City Lettings