A property rented as a House in Multiple Occupation (HMO) will generate a higher yield than if it were rented to a single household, but it also comes with more responsibility and maintenance.

As a landlord, it’s natural you want to maximise your rental income; turning your property into an HMO is an excellent way to achieve that. However, the laws governing properties let on a room-by-room basis can be complex.

Each HMO must demonstrate it complies with local and national HMO legislation, which increasingly requires an individual license for every HMO. Landlords who fail to comply can be fined up to £5,000 per offence, which can quickly mount up if you are found to be in violation of multiple regulations or repeat offences. Your tenants can also ask the courts to request a rent repayment. And if you are found to be renting an unlicensed HMO, the fine is unlimited.

A better return on investment

A property is considered to be an HMO when it is occupied by three or more people forming more than one household. They share the basic amenities in the house and pay rent separately.

Typical rent for a 3-bedroom house in London is £1,500 per month. By converting some of the downstairs rooms into bedrooms, you can rent these out as five rooms for £450 each, increasing your income by 50% each month.

House in Multiple Occupation

Managing an HMO

HMOs mean landlords face a higher turnover of tenants, greater maintenance of the property, and more call-outs as you are dealing with more than one household, and they are not all guaranteed to get on with each other.

Each time a tenant moves out, their room needs to be inspected and any work to maintain the fixtures and fittings undertaken before a new tenant arrives.

An Assured Shorthold Tenancy agreement needs to be issued for each room that is let. Billing also needs careful consideration. It may be easier for the landlord to keep control of these and charge everyone a fixed rate for utilities and council tax.

Cleaning of the house, including communal areas, should also be considered and ground rules put in place.

It all amounts to a full-time job, and that’s before you tackle licensing and other legal aspects of an HMO.

HMO licensing

At AMS Housing, we not only take on the time-consuming work of running HMOs for our landlord clients, but we also manage the legal requirements too. Each Local Authority has its own HMO licensing scheme and rules, which affect minimum room size, as well as the quality and range of amenities, safeguards and services you must offer your tenants. Read more about landlord licensing here.

It can be hard for landlords to keep up with the changing regulatory environment. As experts in HMO regulations, we make it our business to know. Our team understand the health and safety requirements, and the importance of keeping the property in a good state of repair.

Unlike an ordinary tenancy, HMOs require more proactive management to ensure they adhere to their licence requirements. More regular inspection visits to the property are needed – in some cases, weekly – and any contact with tenants and work done must be carefully documented.

We have a strong track record in HMO management. We secure our clients the maximum return, take care of tenants’ needs, and enjoy good relations with Local Authorities across London and the South East because we consistently show due diligence with the properties we manage. Call us to see how we can help you.