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Letting an HMO property allows landlords to have more tenants and generate more rental income. However, HMO landlords have more rules and responsibilities to follow, such as licensing, overcrowding, and minimum size requirements.
Read on to find out about how HMOs work and what you need to do to let one safely and successfully.
HMO stands for house in multiple occupation. The HMO definition is a property which has three or more people from more than one household living there who share kitchen, bathroom, or toilet facilities.
The government defines a household as a single person, or members of the same family living in the same property. For example, three unrelated people in three rooms would make up three households, while a property with two couples would make up two households.
HMOs can take many forms. They're often a shared property where the tenants aren't related to each other, or a house split into several rooms.
For a property to be considered an HMO, rent must be paid, and it must be the occupants’ main residence.
There’s a separate category of property known as a large HMO. A property is a large HMO if it has at least five tenants forming more than one household, and the tenants share toilet, bathroom, or kitchen facilities.
However, landlords of HMOs have a number of extra responsibilities. These include:
It’s important to note that these are legal responsibilities for HMO landlords no matter what’s stated in the tenancy agreement.
In 2018, the government introduced minimum bedroom sizes for HMO properties that need a licence.
Read our in-depth [guide(/knowledge/articles/2021/06/guide-to-hmo-minimum-bedroom-sizes/) to find out about minimum room sizes], overcrowding in HMOs, and how you can comply with the rules.
All large HMOs must be licenced. So, if your property is let to five or more unrelated tenants, and has shared tenant facilities, you must apply for an HMO licence.
Even if you don’t have a large HMO, some councils require HMO properties to have a licence. Each licence will specify the maximum number of people that can occupy the property and how long it’s valid for.
You should also remember that some councils require all landlords to be registered, regardless of whether or not their properties are HMOs. If you’re in doubt, check with your local council first.
You should apply for an HMO licence through your local council. Individual councils will set the terms of the licence. You can apply yourself, or you can ask your letting agent to do it for you.
The landlord must inform a number of different parties when applying for a licence, and you must also pass on the details of these people to the council. They are:
You can find out how to apply for your HMO licence here.
The cost of an HMO licence is set by individual councils. It’s normally charged as a fee for applying, and will be non-refundable regardless of whether or not the licence is granted.
For example, the cost of an HMO licence in Westminster, London, is £975, rising to £1,240 for self-contained flats. Meanwhile, costs for HMO licences in Newcastle and Bournemouth start at £750 and £695 respectively. There are often discounts available for accredited landlords and renewals.
HMO licences normally last for a period of five years. At least once during that period, the council will inspect the property to make sure that it doesn’t have any health and safety hazards.
If you're the landlord of an HMO that should be licensed but it's not, you're committing a criminal offence and there are HMO licence fines you should be aware of.
You could be prosecuted and get an unlimited fine. You could also be ordered to repay up to 12 months’ rent or, if the tenants are in receipt of housing benefit, you could be ordered to repay 12 months’ housing benefit to the council.
There are also fines for renting to more than the number of tenants allowed on the licence or breaking other licence terms. These fines are set by your local council, ranging from £5,000 to £20,000.
If you break the terms of your licence, you could be fined up to £5,000. If you break the terms by renting to more than the number of tenants allowed on the licence, you could be fined up to £20,000.
What’s more, it’s important to understand that if your HMO isn’t properly licensed, you may not be able to evict tenants. In the case of an assured shorthold tenancy, a section 21 notice won’t be valid if an HMO isn’t licensed when it should be.
Let us know about your experience with renting HMO properties in the comments.
Conor Shilling is a Copywriter at Simply Business with over two years’ experience in the insurance industry. A trained journalist, Conor has worked as a professional writer for 10 years. His previous experience includes writing for several leading online property trade publications. Conor specialises in the buy-to-let market, landlords, and small business finance.
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