Converting a property into a house of multiple occupancy
Known as a HMO, a house of multiple occupancy is one that has three or more tenants living there, who are not part of the same household. Commonly used by students, or perhaps single professionals.
The reason why these are popular for landlords is because it offers a higher rental income then renting out the property alone. Not only this but if you are in a student area, then you are almost guaranteed to find people to fill the property.
So, if you are thinking about having your very own HMO as part of your rental portfolio, then read on about the best ways to convert your property into a HMO.
The early stages
If you want to rent out an HMO, then you are likely to need to apply a licence. This is particularly true if you aim to rent out to more than 5 tenants, if they share a toilet, bathroom or kitchen or whether they are 3 or more stories high.
However, it is always a good idea to apply for a licence regardless of the situation, as you won’t want to get into trouble with your local authority. A license is valid for 5 years at a time, and you will need a license per property not just per landlord.
You should also think about planning permission for the property too, this is particularly true if you are going to be making any changes to the property.
Just remember to keep hold of your correspondence that relates to these formal parts of the process, and that way you can be sure that you are covered.
Thinking about what you need
Before you start to convert your property into a HMO, you should always think about the space that your tenants are going to need. Not only for themselves, but also for their furniture and belongings too. You need to consider whether you will be providing appliances, and if so, how many, as this will have an impact on the design of the HMO.
There is a good chance that you will find that you need to convert some of the rooms, or the garage, within the property in order to make space for your tenants. This could also mean building walls between rooms in order to maximise the income that you can generate. However, this should never be at the detriment to the space that your tenants have.
?Anything else to keep in mind?
Every HMO will have a visit organised by the local council. This visit will include a Housing Health and Safety Rating System risk assessment. If there are any risks found in the property then you will need to address these.
You will need to also remember that there is a good chance that you will see a high turnover of tenants when you rent out a HMO. This means that you will need to try and put aside at least 2 months worth of rent each year, in order to cover any eventualities like this. You should also keep in mind, that appliances, with a higher level of use, could need replacing more frequently.
Whilst they may be slightly trickier to manage and take more time to set up initially, HMO’s are definitely worth it. Particularly if you are landlord who really wants to make a success of things.