Renting out your property to several tenants? If your answer is ‘yes’, then your property may be categorised as a House in Multiple Occupation (HMO). Several landlords have recently discovered how costly an error it can be to let an unlicensed HMO. Here we offer you our best tips on how to manage your HMO property and stay within the law.
Many landlords let their properties out as HMOs, as they consider this to be a more lucrative method of running a lettings portfolio. They can collect rent from a higher number of tenants, although the location and property type can also be incentives where, for instance, the location is a university town with high student demand. Whatever the reason for choosing to let in this way, it’s essential landlords ensure their HMOs meet the government’s regulations.
When running a compliant HMO, you first need to understand how both the government and your local authority define an HMO. Is a licence is required or not? And, do you need planning permission?
What is a HMO?
In the UK the government defines a HMO when there:
- Are at least three tenants living in the property who form more than one household
- Facilities such as toilets, bathrooms or a kitchen are shared.
This may not seem very clear, but the number of tenants is what matters here. If your property houses two unrelated tenants, it’s not an HMO. Any building or part of a building, which is occupied by just two people cannot be classified as an HMO, even ‘though those individuals are unrelated. For a premises to be categorised as an HMO, there must be at least three unrelated people living there.
Having established this, you now need to know that if your property is an HMO and occupied by five or more unrelated people, it must have a licence. However, what can cause confusion (and makes it easy to not be compliant if you’re unaware of it), is that your local council may also require further selected or additional licence types. In effect, your particular council’s HMO regulations could require that a property that has just three tenants still has to be licensed.
Romans’ lettings experts are always on top of current and new legislation regarding HMOs, so if you’re uncertain about any aspect of letting your HMO, do contact your local branch, where one of our experienced team will be happy to advise you.
What happens to landlords not running a compliant HMO?
Fines of up to £30,000 can be issued by local authorities if regulations are breached.
In addition, if you have an HMO property in London, all local councils participate in a Rogue Landlord and Agent Checker system. This database 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 was prosecuted in Uxbridge for breaching HMO licence rules and not installing a safe fire alarm and fined £11,000.
However, landlords outside London can also expect heavy financial penalties for contravening regulations. An agent in Reading was fined £25,000 in June 2018 for letting an HMO and failing to meet fire and other safety laws.
Which are the main compliance areas for running an HMO?
Properties which are let privately need to meet over 400 government’s rules and regulations, set by in excess of 160 laws. The important rules to be aware of include ensuring the property is safe and habitable by providing compulsory items such as a:
Your property should also be free of damp and mould, and it is wise to check for things that can cause slips or trips, such as a frayed or poorly fitting flooring indoors through to broken slabs outside. The checks you need to make are quite specific, so chat to one of our letting experts if you’re unsure about any of the regulations relevant to letting an HMO.
It’s also essential to know that, when letting to tenants, you are legally required to carry out ‘Right to Rent’ checks. Failure to do this could mean imprisonment of up to five years or a fine of up £3,000. Tenants must be given all prescribed information pertaining to renting a property, including the government’s ‘How to Rent Guide’, together with information about where their deposit is held if letting via a shorthold assured tenancy agreement.
However, where an HMO is concerned, 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. The most usual areas to require your attention are health and safety, minimum room size and tenant checks.
Health and safety checks to make
When letting a property, you must have a current gas safety certificate, but if you’re running a HMO, you must also undertake an inspection of the property’s electrical system every five years, besides carrying out a fire risk assessment. Here are a few examples of the checks you’re obliged to make:
- Check if communal areas are clear: tenants need to escape easily if there is a fire
- Fire doors: are they fitted where needed and do they meet current regulations?
- Furnishings: do they meet the Furniture and Furnishings (Fire) (Safety) Regulations 1988
- Fire blankets and extinguishers: what rules do local housing offices apply?
Visit this guide to better understand fire safety in housing. We recognise that the health and safety rules for rented properties are complex, and even more so for HMOs. For peace of mind, why not talk to our landlord experts at Romans? A member of our experienced team can help you with the practicalities of carrying out a fire risk assessment, as well as guiding you through the other checks on your property that you need to do now and in the future.
Minimum room sizes
For HMOs which have been granted a license from 1 October 2018, it is essential that sleeping accommodation needs to meet minimum space standards:
- Single person (over 10 years old) - a minimum of 6.51m²
- Two people - 10.22m²
The space calculation is only applicable to areas where the ceiling height is at least 1.5m, any lower and it can’t be included. If you’re not sure if your property conforms, we have the expertise to help you stick to the regulations.
Tenant checks – do you know who’s renting your property?
When renting an HMO to unrelated people, it’s not always easy to know whether the original tenants you put in the property are still there. Sometimes tenants move in partners or friends, or may decide to leave without telling you and move someone else in.
As a landlord, it’s important for you to know you’re required to carry out ‘Right to Rent’ checks on each of your tenants before they move in, and it’s therefore essential you regularly check up on who is living in your HMO, or work with agent who will do this for you. Without regular checks, you could very easily be in breach of the rules, especially if the new tenant turns out not to be in this country legally.
Expert property management from Romans
Running a compliant HMO not only requires keeping up with HMO rules and regulations, but also keeping up with individual council changes, such as implementing additional and selective licensing schemes. And if you’re letting an HMO, it is important not just to be compliant when you first let, you need to be constantly aware of any changes which may affect you and your tenants in the future.
The team at Romans can support you by providing a specialist advice service for all aspects of running a HMO, up to and including applying for a licence on your behalf. Our local lettings experts are always in touch with current lettings legislation, so that you don’t have to be.
If you own a HMO, or are considering investing in one, speak to one of our property experts to discover how we can help. Call us on 0808 2311 796, where a member of our experienced team will be delighted to have an initial chat with you.
Contact our lettings team, now!