HMO property investment is grabbing the attention of many UK landlords right now. With promises of rich pickings a good number of Buy to Let investors have turned their attention to HMO’s. But what is it really like to run a House in Multiple Occupation?

First – what is an HMO property?

Regulations determine when a rental property stops being a standard rental unit and instead becomes classed as an HMO. Any property with three or more unrelated tenants, forming two or more households, will be classed as an HMO. The same tenants will also share amenities such as a toilet, bathroom or kitchen.

Why are landlords attracted to HMO property investment?

Renting out HMO’s can be attractive due to the potential for increased profits when done correctly. Unlike traditional rental properties, HMO’s have a higher rental income on average. Properties are let out on a ‘room by room’ basis. This has the effect of capitalising on the asset. However, with this increased potential for greater profits comes greater regulations that surround HMO property. And these regulations can end up costing both time and money. Landlords should research how such costs can mount up as HMO property is not for the faint hearted.

Legal responsibilities for HMO landlords

There are legal standards which HMO landlords face. For example, for all properties with five bedrooms or move and three storeys this may require both planning permission and an HMO licence. HMO properties typically require more time and effort than usual rental properties. If you are considering investing in a HMO property, make sure you have the ability and resources to meet the demands. Also consider seeking expert advice of an HMO letting agent. You may want to consider either their full management or Guaranteed Rent services.

The responsibilities for HMO landlords come under two important pieces of legislation:

  • The Management of Houses in Multiple Occupation (England) Regulations 2006.
  • Licensing and Management of Houses in Multiple Occupation (Additional Provisions) (England) Regulations 2007.

Regardless of whether your property requires a licence or not, you must conform to the management regulations. A breach of any of the regulatory terms is likely to be approached as a criminal offence. The landlord can expect to face prosecution by the local authority. Convictions are usually dealt with at the Magistrates court and hold fines of up to £5,000 or more in extreme cases.

Who to ask about regulations

Your local council will be responsible for regulating and enforcing the correct management for HMO property. The authorities have the power to introduce individual requirements for licensing. As an HMO landlord, your local authorities should be your first contact point for any queries you may have.

For information on any of the above or advice on anything relating to investing in HMO property within Nottingham, please do not hesitate to call us on 0115 740 1800.

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