Important Considerations to Make Before Becoming an HMO Landlord

Published on August 12, 2017 by Sarah Mac

A property is a house in multiple occupation (HMO) if at least three tenants live there forming more than one household (i.e. they are not related or in a relationship) and they share toilet, bathroom or kitchen facilities with other tenants. A two-person flat-share is not classed as an HMO.

Landlords tend to be drawn to the idea of renting out on an HMO basis because it can prove more profitable than traditional rental methods. However, it must be considered that this type of renting does come with a range of special requirements and that a raft of legislation and regulations apply, which can in many ways increase costs as well as time investment.

Meeting legal standards will incur additional costs, as will acquiring the necessary licences and planning permissions. Also bear in mind that HMO council tax is payable by the landlord rather than the tenants.

It’s the local authorities which are responsible for enforcing and regulating HMO management. They hold powers that enable them to levy their own individual licensing requirements for the locality, which makes them the first contact point for any landlord with queries about the regulations with which they are required to comply.

Legislation Applicable to HMOs

All HMOs, regardless of the local authority under which they fall and whether or not they are licensable, fall under two key pieces of legislation.

The first is the Management of Houses in Multiple Occupation (England) Regulations 2006. The other one is the Licensing and Management of Houses in Multiple Occupation (Additional Provisions) (England) Regulations 2007.

Landlord Duties for HMOs

Both pieces of legislation place certain duties on whoever is responsible for managing the property. These duties include:

1. Providing all occupants with the name, address and telephone number of the manager via a notice clearly displayed within the property
2. Making sure all fire escapes are clear of obstacles and that they are well maintained
3. Ensuring all fire safety measures* are maintained in good working order
4. Making sure sufficient fire safety measures are in place and that these fall in line with the number of occupants as well as the design and structural conditions of the property
5. Maintaining a sufficient water supply and drainage system to the property
6. Taking steps to ensure the gas and electric supplies are not unreasonably interrupted
7. Making sure that every fixed electrical installation is inspected and tested by a suitably qualified person and that this testing is carried out periodically with no more than five years between each inspection
8. Providing gas and electrical inspection certificates within seven days of written request from the local housing authority
9. Making sure that all common parts of the property are maintained in good decorative order and that all aspects are safe. As well as the main property, this extends to gardens, outbuildings and boundaries.
10. Ensuring that each individual accommodation unit and its contents are clean ahead of new tenants checking in.
11. Making sure that the contents of individual accommodation units are in good repair and working order throughout the entire duration of the tenancy.
12. Providing sufficient facilities for waste disposal.

* Fire safety measures are as follows:

• A fire extinguisher of the correct type on every floor (See http://www.firesafe.org.uk/types-use-and-colours-of-portable-fire-extinguishers)
• A fire blanket for each shared kitchen
• A smoke and fire resistant escape route
• Correctly functioning self-closing, fire resistant doors on all fire escape routes
• Fire warning systems
• No Smoking signs in common areas

HMO Tenant Responsibilities

Tenants of HMOs also have their own responsibilities. These include:

1. Allowing the landlord or property manager access to the premises at all reasonable times so they are able to meet the responsibilities listed above
2. Never acting in such a way that they prevent the manager to undertake their duties
3. Take reasonable care to avoid causing damage to the property they are renting
4. Dispose of waste in an appropriate matter and in line with the requirements of the local authority
5. Comply with fire safety instructions

Penalties for Breach of Regulations

Any landlord or tenant found to be in breach of regulatory conditions is likely to be dealt with via criminal proceedings and will be prosecuted by the local authority. Cases are often heard in the Magistrates’ Court and convictions regularly carry fines of up to £5,000 per offence.

Whilst HMO landlords stand to benefit in regard to rental yield, there are clearly far more hoops to jump through and regulations with which to comply in comparison to regular rental property, so be sure to give it due consideration and do your homework as to hidden costs and time pressures.

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