Posted on 26th July 2017

Houses in Multiple Occupation - What do I Need to Know to Rent my HMO?

Martin Williamson, Director & Head of Residential Property
Martin Williamson, Director & Head of Residential Property

Landlords are often approached with a variety of scenarios regarding who will be their tenant. Often it will be families, or single people, or couples, however sometimes it will be friends looking to rent a house together. While this is most common in university towns and cities, it is increasingly becoming an option for those who need a place to live, but also must share the cost of the rent.

When a group of three or more unrelated people share a house, this is called a ‘house in multiple occupation’ or HMO. This means that the home has common areas which people who are not family share, such as a bathroom, kitchen or utility room. If you are considering letting a property as an HMO, you will need to consider certain regulations, otherwise you could find yourself on the wrong side of the law.

Consider how many people can comfortably live in the house. In a family, a two bedroom house may be suitable for four people, as the parents will have one room and the children can share up to a certain age. This arrangement would, however, be unsuitable for four adults who are not related, as they would need their personal space. If two of the tenants are in a relationship, they may only take up one room, however the size of the room should be comfortable for two adults to live out of, not, for example, a box room.

The available facilities should also factor in to how many people can comfortably live in the space. If the house only has one bathroom, will this be sufficient for the occupants? Does the kitchen have enough storage space for each tenant to store their food and cooking equipment? Could all the residents comfortably sit in the living area at the same time? If the answer to any of these questions is no, you should consider renting the property out to fewer people.

If you are managing the rental or employing an agent, you will need to ensure that the responsible party would be considered ‘fit and proper’, as this is a condition of renting out an HMO. This means the person managing the property must not have any previous violations of landlord laws or codes of practice, and must not have any criminal convictions.

From a legal perspective, you may need to apply for a licence from your local council before you rent out as an HMO. If the property rented to five or more people from multiple households, it is at least three storeys high and occupants share toilet, bathroom or kitchen facilities, you will certainly need to apply for a licence. Smaller properties rented to fewer tenants may also require a licence, however this is decided by individual councils, and you should check before proceeding with the rental. Licences are valid for a maximum of five years, and must be renewed if the house is going to continue to be an HMO after this time.

You will also have a responsibility for the health and safety of your residents. This includes installing smoke alarms and ensuring they are maintained. The local fire department offer a free service where they will offer advice to residents about fire safety and escape routes, and will install smoke detectors. You will also be required to provide the council with an updated gas safety certificate every year and safety certificates for electrical appliances if requested.

An HMO can be a beneficial arrangement for both landlords and tenants. If you are able to complete the regulatory requirements and find regular residents, you could find it a profitable enterprise for many years.

Please note: This article is intended as guidance only. No responsibility for loss occasioned/costs arising as a result of any act/failure to act on the basis of this article can be accepted by Latimer Hinks. In addition, no responsibility for loss occasioned/costs arising as a result of any act/failure to act on the basis of this article can be accepted by the firm.