How to start an HMO: Advice for landlords

In this article, Commercial Property Solicitor Hannah Martin provides advice for landlords looking to start an HMO.

Hannah outlines the requirements and licensing conditions, and discusses the responsibilities of an HMO landlord.

What defines an HMO?

HMO stands for Houses in Multiple Occupation.

An HMO is defined by the Government as a property that is rented out by at least 3 tenants who are not from the same household but share ‘facilities’ such as the bathroom and kitchen.

If the above is true, yet at least 5 tenants occupy the property, then it is known as a ‘large HMO’.

What are HMO requirements?

HMOs have certain requirements which they must meet.

One of which, being a valid tenancy. So, any tenancy agreement that is in place must be one that complies with the law.

HMO landlords often opt for an Assured Shorthold Tenancy (AST). Read more about ASTs here.

Do all HMOs need to be licenced?

It is mandatory for all Large HMOs to be licenced.

The council has the discretion to decide whether small HMOs should be licenced. It is therefore important to speak to the council to find out if your property requires a licence.

To apply for an HMO licence, speak to the council most local to the property. Be aware that there is a small fee involved in application and that you’ll require relevant documentation.

Licences are valid for 5 years and need to renewed after this time. Licences are not transferable and so if you are purchasing an HMO you will need to apply for a new licence.

What is the minimum room size for an HMO?

As part of the licensing process, you will need to ensure that the bedrooms are of a certain size.

The minimum bedroom sizes for HMOs are as follows:

• A bedroom occupied with one adult - 6.51 M²
• A bedroom occupied by two adults – 10.22 M²
• A bedroom occupied by children under the age of 10 – 4.64 M²

Can an HMO licence be refused?

Yes, an HMO licence may be refused for various reasons such as if it does not meet the minimum requirements (such as the room size conditions).

The most common reason for refusal is that the property has too many rooms or occupants. A licence may also be refused if there are a high number of HMOs in your local area.

What to do if I’m refused an HMO licence?

The steps available will depend on the reason for the refusal.

If the property is refused because it does not meet the minimum requirements, then to obtain the licence you will need to undertake the works and bring the property up to standard.

If a licence is refused you do have the ability to appeal the decision with the Residential Property Tribunal, usually within 28 days. More information as to how to appeal a refusal can be found on the government website.

Can the council repossess an HMO?

Sometimes the council will set out conditions to be met before the licence is granted. If these conditions are not complied with, the council has the right to issue an Interim Management Order (IMO) and take over the management of the property.

The council will have the right to take possession of the property and use any income received to undertake the necessary repairs to the property.

If after 12 months, the property is still unsuitable then the council can apply for a Final Management Order (FMO) which would last for five years.

Do I need planning permission for an HMO?

For small HMOs, generally no. However, ‘large HMOs’ of 5 or more tenants will usually require planning permission.

However, a number of councils are implementing Article 4 Directions which will mean if you are changing the use of the property from a residential dwelling (Use Class C3) into an HMO (Use Class C4) you must obtain planning permission.

Simply obtaining a licence will not be sufficient. Almost the whole of Bournemouth is subject to this direction, so it is important to check whether the property is affected by this restriction.

To apply for planning permission, contact your local planning authority through your local council.

Do HMOs need building regulations?

When a property’s use is changed from being a single dwelling to an HMO, and more than six tenants exist, building regulations will be required.

Contact a local authority or private building control body to apply for approval.

What is an HMO landlord responsible for?

• Taking and implementing fire safety measures
• Keeping communal areas and facilities in a good state of repair
• Electrical and gas safety checks
• Electrical, water, gas, bathroom, heater and house structure repairs

Read more about the responsibilities of a residential landlord here.

How much does it cost to set up an HMO?

There are many costs involved with setting up an HMO, all of these may not apply to you, but here’s a list of the most prominent costs:

• Cost of the property (outright, or mortgage)
• Estate agent fees (again, if you don’t already own the property)
• Conveyancing fees
• Obtaining a tenancy agreement through a solicitor
• Licensing fee

How much does it cost to run an HMO?

Here’s a list of potential costs:

• Gas, electricity, water costs
• Broadband, TV packages and TV licence
• Maintenance (varies depending on work involved)
• Attaining an EICR
• Attaining energy performance and gas certificates

If you currently own a HMO, but wish to change property lender to get a better deal, you can read our dedicated article on remortgaging here.

HMO advice solicitors

At Frettens, our bright Property Team would be happy to assist you in purchasing an HMO or single dwelling.

The team could also assist you in the creation of a legally-binding tenancy agreement that meets the legal standards.

We offer a free initial consultation for all new clients, so please don’t hesitate to get in touch.

Call us on 01202 499255 or fill out the form at the top of this page.