Transforming a home into a house share property can be a hugely rewarding step for a landlord to take. Not only does it give them a chance to earn rent from several tenants rather than relying on a single let, they also get an opportunity to use a property to its full potential.
Setting up a house share situation is pretty straightforward, but it is important for landlords taking the step to fully understand their responsibilities when it comes to the issue. One of the key terms they need to know is HMO and in this article, we are going to take a look at just what is an HMO property and why the size of it can be a very important matter.
What is a HMO property?
An HMO property is a house in multiple occupation and this is a term used to describe a property rented out to at least three people who are not from the same household but share core facilities like a bathroom or kitchen.
It is essentially the official term for a house share and it is something that you have to be aware of, as some councils stipulate that you need a special HMO licence to rent a property in this manner.
What is a large HMO?
Now you know just what is an HMO property, but it is worth bearing in mind that they come in all shapes and sizes and there is also a formal definition of a large HMO. A house is defined as this if it is rented to five or more people who form more than one household and they share key facilities.
This may seem on the face of it like a small difference from the classification of a standard HMO, but it is important for several reasons.
Why does the difference between a regular and large HMO matter?
A standard HMO may or may not require a licence from your local council, though this can be ascertained simply by checking the available government resources. However, it is compulsory to have one for a large HMO. These licences are valid for a maximum of five years and need to be renewed before they expire. Furthermore, you would need one for each HMO that you are operating.
By taking out a licence you are essentially agreeing to some key conditions and duties, which include:
- ensuring the house is suitable for the number of tenants;
- confirming that you are a fit and proper person;
- sending an updated gas safety certificate to your local authority every year;
- installing and maintaining smoke alarms.
What other key issues should be considered?
There are also more practical issues to consider when it comes to running a large HMO. For instance, there may be more work required to refurbish or change a property to make it suitable for five or more tenants, while there is perhaps also a greater risk of friction between housemates if there are more people living there.
It is also worth thinking about issues such as tax, since setting up an HMO could offer benefits with costs being tax-deductible.
Of course, another key issue to consider is how you will find prospective tenants; however, here at badi, we can help you through that process. Services like our secure booking and private chat through either the app or the website have been designed to put the power in your hands and help you get your HMO off to the best possible start.