An HMO is typically a property that is shared by three or more tenants and who are not members of the same family. Typically this will be a shared flat or house or bedsits. The rates of return are typically better on this sort of property for landlords but this is balanced by the need for greater active property management and more regulation. With HMOs it is usually the landlord who will be responsible for the Council Tax.
The actual legal definition of HMO contained in the Housing Act 2004 is surprisingly broad. For instance the freehold of a building which has been converted into flats, if it does not have the correct building regulations, may rank as an HMO, while a purpose built block of flats will not. When purchasing a property to rent ensure you take legal advice as to whether is an HMO or not, or contact your local authority's housing team for more advice.
Licensing of HMOs
HMOs are defined by government as having at least three tenants, of more than one family, and if tenants are required to share toilet, bathroom or kitchen facilities.
Homes defined by the government as a large HMO come under the mandatory licensing regime. These are where there are at least five tenants living there, of more than one family and have to share toilet, bathroom and kitchen facilities.
If the property requires a licence there are three implications for the landlord:
- The registration attracts a fee
- The landlord and their associates must satisfy the requirement to be a fit and proper person
- The property must be up to an acceptable standard
Housing Health and Safety Rating System
The local authority will assess whether a property is up to an acceptable standard using the Housing Health and Safety Rating System. This is an assessment system of the state of a property which looks at a whole raft of different 'hazards' in the property from the state of the exterior of the property to dampness and sanitation and assesses whether the property is in an appropriate condition.
Fire Regulations for HMOs
HMOs have more stringent fire regulations these include requirements than other tenanted properties. They require:
- Fire alarms throughout the building and in high risk areas
- Fire systems to be checked regularly
- Fire equipment such as fire extinguishers and fire blankets
- An escape route with fire self-closing resistant doors
Restrictions on Landlords
The HMO regime places significant potential costs on landlords. It is essential if you own or are looking to buy an HMO that you check the ground carefully with the appropriate local authority and with the fire officer. If the system was not complex enough different authorities will have differing views on how the regulations are implemented.
Finally, the landlord will also need to make sure if they are unable to manage the property themselves that suitable management is available and the manager complies with detailed regulations set out in the Management of Houses in Multiple Occupation (England) Regulations 2006.