A handy guide to running a compliant HMO

Do you rent out your property to several tenants? If so, your property may be considered a House in Multiple Occupation (HMO). Having an unlicensed HMO has proven a costly mistake for several landlords recently, so read on to learn about what’s needed when letting a HMO.

Many landlords let their properties out as HMOs, as they consider it a more efficient way to run a rental portfolio - sometimes due to being able to collect rent from a higher number of tenants, although location and property type can also be drivers (a university town with lots of students for example). But landlords need to ensure their HMOs meet the government’s regulations.

To run a compliant HMO the first thing to understand is how the government and your local authority defines a HMO, whether a licence is required or not, and indeed, if you need planning permission.

What is an HMO?

The UK government defines a HMO as a property where:

·         at least 3 tenants live, forming more than one household

·         and there is a shared toilet, bathroom or kitchen facilities for all tenants.

It is a little confusing, but the key is in the numbers. If your property has two tenants that are unrelated, it’s not a HMO. Any building, or part of a building, which is occupied by just two people cannot be a HMO, even though those individuals are unrelated. For premises to be a HMO, there must be at least three unrelated people living there.

If your property is a HMO and occupied by five or more unrelated people, it must have a licence. However, where it can get even more confusing – and easy to not be compliant – is your local council may also require further selected or additional licence types, which could mean a property with just three tenants may still need a licence.

Leaders’ lettings experts are up to speed with all the legislation regarding HMOs, so if you’re uncertain, contact your local branch.

What happens if a landlord doesn’t have a compliant HMO?

Councils can issue fines of up to £30,000 for each breach of the rules.

If you have a HMO property in London, all local councils participate in a Rogue Landlord and Agent Checker system. This contains information about private landlords and letting agents who have been prosecuted or fined for not abiding by renting rules and regulations. For example, a landlord in Barnet was prosecuted in June 2019 for operating an unlicensed HMO. 

Landlords outside London can also expect heavy financial penalties for slipping up on regulations. A HMO landlord in Birmingham was fined £2,000 in September 2019 for failing to fit the property with fire safety measures, letting the house to nine occupants without a licence. Meanwhile, two HMO landlords in Oxford received fines of £15,624 and £10,000 respectively in 2018, for failing to comply with regulations.

What are the key compliance areas for running an HMO?

Any property that’s privately let needs to adhere to all the government’s rules and regulations (of which there are around 400). The key rules to be aware include ensuring the property is safe and habitable, by providing things such as a gas safety certificate, an up-to-date EPC and smoke alarms and an electrical certificate. You should also check the property is free of damp and mould, and that tenants aren’t subject to slips and trips, for example, due to frayed or ill-fitting flooring or uneven paths. Talk to a letting expert at Leaders if you’re confused or unsure by any of the regulations.

Secondly, when letting to tenants you need to ensure they have a ‘Right to Rent’ in England, they’re given all the prescribed information required, such as the government’s ‘How to Rent Guide’ and information about where their deposit is held.

However, with a HMO, especially if a licence is required, you are subject to many more rules and regulations, some of which could be specific to your local authority. Key areas to consider are Health and safety, Minimum room size and Tenant checks.

Health and safety

Not only do you need to have a gas safety certificate, but if running a HMO, you’ll also need a periodic inspection of the electrics every five years, and to carry out a fire risk assessment. Examples of checks to make:

·         Are communal areas being kept clear so tenants can escape in the event of a fire?

·         Are fire doors fitted for escape routes?

·         Do furnishings comply with Furniture and Furnishings (Fire) (Safety) Regulations 1988?

·         Are fire blankets and extinguishers required?

A comprehensive guide to fire safety in housing is available online here. We know that the health and safety rules for rented properties are complex, and even more so for HMOs - so talk to the landlord experts at Leaders. We can help you carry out a fire risk assessment, as well as other checks you’ll need now and in the future. 

Minimum room sizes

For HMOs licensed from 1 October 2018, sleeping accommodation needs to be a minimum of 6.51m² for a single person (if over 10 years old), and over 10.22 m² for two people.

Tenant checks – who is in your home?  

When renting a HMO to different people, it’s not always easy to keep track of the number of people living in the property. As a landlord, you’re required to carry out the Right to Rent checks on all tenants before they move in, so it is essential you regularly check on who is living in your HMO.

A partner may move in, a tenant may move out and move someone else in – and they may not tell you. This can put you in breach of the rules, especially if the new tenant isn’t legally allowed to live in the country. 

Expert property management from Leaders

Running a compliant HMO is a complicated business, especially with councils being able to implement their own additional and selective licensing schemes. If you have an HMO, it is important not just to be compliant from the start, but be aware of any changes which may affect you and your tenants in the future.

Leaders is able to support you by providing a specialist advice service for all aspects of running a HMO - and we can even apply on your behalf for a licence.

If you have a HMO, or are considering investing in one, speak to a Leaders HMO property expert to learn more. Call us on 0371 705 2013 today, where a member of our experienced team will be delighted to have an initial chat with you.