Those of you who are regular readers know that I am an advocate of the benefits that HMO’s can provide both investor-landlords as well as tenants. Yes, ownership can be profitable. As importantly, residents can enjoy less expense and a greater quality of life by sharing common spaces and daily lives with other “households”.
On the other side of the coin, there are the necessary, not-so-much-fun, legal requirements procedures. Don’t panic or stop reading. I’m not going to bore anyone with suffocating detail or regulatory citations.
Those functions are the job of the Council and other agencies.
But with let’s start with the basics. There are many conditions that may qualify a building or living arrangements as an HMO. There are many conditions that may require the property to be defined as an HMO. There are also plenty of situations and exceptions, which may nullify all of the above.
We can safely assume that a house or flat wherein 3 or more residents representing at least 2 “households” (a single person or family living together in their separate, dedicated rooms) share common areas. One indicator of “separate households” can be separate tenancy agreements. Note that if the landlord resides on the property, he or she would be included in the formula. Then again, according to some sources, actual payment of rent is stated to be a determining factor in the legal definition of an HMO.
And things can get a bit trickier. A structure that contains other areas than exclusively “self contained” flats is probably an HMO, whether or not the facilities are shared. (“Self-contained” refers to all facilities such as kitchens and toilets being part of each flat, to the exclusive use of each household living therein.)
I’ll conclude my examples with one that continues to confuse me: a structure, or part thereof, that is solely devoted to converted, self-contained, flats. If the conversion fails to comply with the Building Regulations of 1991 and more than 33% of the flats are occupied under short tenancies, the property is defined as a Section 257 HMO.
I think we all can see where this is going. The rules and regulations of owning an HMO (if, in fact, it is an HMO) do entail some complexity and potential contradiction. Remember that I told you not to panic?
Well, don’t panic.
Among 40 clear and concise pages, a great deal of knowledge is available in the downloadable handbook at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/15652/HMO_Lic_landlords_guide.pdf . From there, your Council will be a primary resource for local and interagency referrals.
My final recommendation will be that, whether you choose to hand over everything to a property management company or “do it yourself”, the very first step is to determine where your specific project falls, under the legal definitions.
Local ordinances will vary from jurisdiction to jurisdiction, council to council and agency to agency. Certifications for electrical, safety and health standards can differ from locale to locale.
Do your homework, but the fundamental step is to ensure that all the criteria for an HMO have been met.