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Those involved in real estate have shown an increased interest in houses in multiple occupation (HMOs). HMOs are incredibly appealing, primarily because of their high income potential. Often, property landlords of HMOs make more of a profit than landlords of other rental properties.

With HMOs, there are higher demands and regulations for the landlord. However, if you can adequately manage those, you’ll reap the benefits in no time at all. Typically, landlords of HMOs already have experience in single-let properties. If you’re newer to the HMO landlord field, then there are some things you should know.


What Is an HMO?

An HMO property is a rented house or building that multiple tenants share. These tenants can be single persons, families, or cohabiting couples. Essentially, it includes numerous households within a single home.

For a house to be considered an HMO, the property must have certain features:

  1. The people living in the HMO cannot get together to form a single household. Each household must be separate.
  2. The occupants cannot use any other property as a place of residence. The HMO must be their primary residence.
  3. If you own an HMO, you can only use it as an HMO and nothing else.
  4. At least one of the occupants has to pay rent, but ideally, each tenant pays rent.

As long as you have these features, you’re set to begin making money from your HMO. Here are 15 tips for HMO property landlords to help you navigate what it takes to own and operate a house in multiple occupation.


1. Get Your HMO License or Renew It

As an HMO landlord, you may need to obtain a specific license. You need to get a license or renew yours under two circumstances:

  • If your property is taller than three stories and has five or more tenants from two or more households, then you need to get a license.
  • If your local council thinks HMO landlords in the region are not adequately managing the property, you will have to get an additional license.

Licenses are valid for five years, and you need a license for every HMO you operate, even though you own all of them. Fees for your license will vary depending on where you live, so it’s best to check with your local council. If you already have a license, ensure it’s up-to-date and renew it if necessary.


2. Understand the Different Types of HMO Properties

When searching for HMO properties, you have to understand that there are various types of HMOs. Here are some of the most common HMOs:

  • Houses or flats shared by multiple people — at least three — coming from at least two different households.
  • A home where you live as the landlord and have more than two tenants with shared areas.
  • Student housing where each student is considered a separate household.

Again, for a property to be considered an HMO, it has to be shared by at least three people, be the primary residence for all tenants, and the tenants must pay rent to the landlord to live there. Usually, the households are not related to each other, and everyone shares common rooms like bathrooms, the kitchen, lounge, or lobby.


3. Target Your Tenant Audience

Next, you’ll want to consider your target audience. Of course, as long as you find a tenant to pay rent and you deem them reliable, then you’ll make money. However, if someone is looking to live in an HMO, they’re probably a specific type of tenant.

You might be in an area of college students, single millennials, single parents, laborers, or any other type of person who might be renting rather than buying a home. If you don’t want to risk working with college students, you might try to target single or cohabiting millennials.


4.  Research Various HMO Property Locations

When you’re searching for an HMO property, you typically want to look in already-established HMO locations. HMOs tend to be clustered together in a particular region of your town. Some properties are just better suited to be an HMO, like Victorian-style homes, townhouses, or duplexes.

Additionally, you want to find a property that attracts the kind of tenants you want. For example, if you’re trying to house college students, it would be wise to search for locations near a university. If you’re looking for construction-type tenants, search for places in booming developments or where major construction companies reside.

It would also be beneficial to find properties near specific amenities, like restaurants, grocery stores, hospitals, and transportation systems.


5. Stick With One HMO Tenant Type

Once you’ve found a location and narrowed your tenant type, you should stick with that tenant type. Each HMO property should have similar types of tenants living there. Unfortunately, it may not be safe to house a couple of female college students with traveling male construction workers.

You can certainly have multiple properties with different kinds of tenants, but don’t mix tenant types within one HMO. Another example of mixing tenants would be putting a young professional who works a 9-to-5 job with a college student who stays up late and likes to party. Keep lifestyles in mind as you rent out your property.


6. Know That Being an HMO Landlord Requires Your Full Attention

As an HMO property landlord, you’ll have to keep your full attention on your properties. It’s a full-time job. Like a single home rental or even a room rental, other rentals can be a side job that brings in extra income. However, with an HMO, you probably should not have any other jobs to attend to.

You’re required to keep your tenants safe. You’ll likely have about five or six tenants living under one roof, and there are probably going to be issues you have to help resolve. Plus, you’ll have a higher tenant turnover rate, so you need to be highly organized with your responsibilities and finances. Hiring someone to help you with day-to-day tasks might be beneficial as you gain more properties.


7. Understand Your Responsibilities

Landlords are required to have specific responsibilities. Your tenants count on you to make repairs and maintain the property, as well as keep them safe and follow health regulations.

For example, you need to make regular inspections of gas, electric, and fire safety. Additionally, you usually provide utilities like water, electricity, and a garbage disposal facility.

It would be best if you also kept the furniture clean. Before a tenant begins living in the HMO, ensure you adequately furnish each room and that they are clean and have zero damage. It might be helpful to hire a cleaner to aid you in these responsibilities.

Providing maintenance whenever there’s an issue is one of your top priorities. It’s not up to the tenant to replace a broken door handle or fix a leaky sink. You’re responsible for the upkeep of the HMO. If you can’t handle these responsibilities, you’ll need to hire others to work with you, or you might need to reconsider owning an HMO.


8. Be Careful When Choosing Tenants

Since HMOs often have a higher turnover rate than other properties, you need to be extremely careful when choosing your tenants. Failure to take the proper measures to ensure a tenant is reliable could result in a tenant who doesn’t pay rent or work well with the others who live in your HMO.

HMOs may attract unwanted tenants. Check their credit history and ensure they have the financial means to pay rent each month. Additionally, check to see that the new tenant will fit well with the other tenants already living in the HMO.


9. Create a Written Tenancy Agreement

Contracts are necessary for any rental property. Before you rent out your property, you should have a written and well-thought-out tenancy agreement. This ensures both you and the tenant know each other’s expectations and responsibilities.

When you have a contract, you can always go back to it if there are disputes over a certain matter. This also facilitates the moving-out process once your tenant decides to leave.

Within the agreement, you should outline monthly costs, responsibilities, how you expect the tenant to live with others, and details of what may cause you to end the tenancy.


10. Make Your Property Comfortable

One of your goals as an HMO property landlord is to attract tenants. It’s the only way you’ll make an income. One way you can make your HMO stand out over others is to make your property super comfortable.

You don’t have to spend all of your money on expensive furniture, though. HMOs usually come with beds and couches. Sleeping on a budget mattress pad or sitting on an uncomfortable sofa isn’t ideal for anyone, so try to make your living spaces comfortable to attract more tenants.


11. Communicate With Your Tenants

This is one of the most important tips for landlords. It will be extremely beneficial for you to communicate with your tenants. If you’re entirely unavailable at all times of the day, your tenant is more likely to leave.

You probably don’t want your tenants calling you in the middle of the night, either. You should set boundaries here. However, you need to make yourself available if any issues with the HMO arise.

Have a phone number where your tenants can reach you. Additionally, you could have a small office space in the HMO with designated office hours if your tenant needs to meet up with you in-person. It’s also wise to visit your properties about once a month to check up on tenants and let them know you exist.


12. Keep Up With Maintenance

You must keep up with maintenance. Even better, you can take preventive measures when it comes to maintaining your properties. This will help you keep your tenants for extended periods, meaning more income for you and a better reputation.

Keep a record of your maintenance checks and regularly inspect the property. In the summer months, make sure the outside of the HMO has solid curb appeal by cutting the grass and mulching. Make sure your tenants’ rooms and the common areas are in working order. Letting these things slip will turn away future customers or attract low-quality ones.


13. Get an HMO Mortgage

As the name suggests, this is a mortgage you can get specifically for an HMO. It allows you to rent out properties with multiple tenancies. There are a few types of HMO mortgages, which are explained below:

  • Development loans: Development loans are intended for major builds or construction projects.
  • Refurbishment mortgages: If you have a lighter refurbishment project for your HMO, you can get this type of mortgage.
  • Mortgages and remortgages: If you’re purchasing an existing HMO, you can get a standard HMO mortgage or a remortgage.

There are also different types of borrowers:

  • HMO mortgages for individuals
  • HMO mortgages for first-time landlords
  • HMO mortgages with zero minimum income requirements
  • HMO mortgages for companies
  • HMO mortgages for limited liability partnerships (LLCs)

If you’re unsure about what type of mortgage to get, talk to a lender or a fellow HMO landlord for guidance.


14. Consider HMO Landlord Insurance

Insurance is there in case you need it. As a landlord to multiple tenants, you’ll need HMO landlord insurance. When you rent out your properties, this insurance gives you peace of mind. Any long-term investment, like a rental property, plus the people within, is worth protecting.

Landlord insurance covers your property against any unexpected damage, theft, fires, natural events, or accidents. It also saves you from a tenant suing you if they are injured or their personal property gets damaged. Although not having insurance would save you money, you could pay substantially more for an unexpected circumstance that’s out of your control.


15. Decide to Purchase an Existing HMO or Convert a Property Into an HMO

Purchasing an existing HMO property is much easier than purchasing and converting a property into an HMO. With an existing HMO, you know the rooms are already the correct size, and you can begin leasing out the HMO reasonably quickly after your purchase.

However, if you decide to take on a property to build an HMO or convert a building into one, it’s going to take more time to get everything in order before you rent out the space. Establishing a budget and sticking to it is the number-one priority in this case. Consider every expense, from building materials to beds and furniture.

For existing buildings, check the roof, insulation, kitchen, and bathrooms. Ensure there are enough toilets and bathrooms for each tenant you plan to have living there. Before advertising your HMO, make sure everything is in proper working order. It should be welcoming enough that you would want to live there yourself.


Pros and Cons of Being an HMO Landlord

As with any occupation, there are always advantages and disadvantages. Below, you’ll find some of the pros and cons of being an HMO landlord.


The pros of being an HMO landlord include:

  • Financial benefits: Perhaps the greatest perk of being an HMO property landlord is that you’ll receive a great amount of income. The rental yields for HMOs are typically higher than any other sort of rental location.
  • High demand for single rooms: Between college students, professional millennials, traveling laborers, and single parents, there’s usually a high demand for single rooms. As long as you choose a good location, you should rarely have empty rooms.
  • Tax advantages: Some regions offer tax advantages or tax deductions for HMO landlords.
  • Relatively stable: Even when there are recessions in real estate, HMOs tend to be stable, since it’s a cheaper option for tenants.

These advantages often outweigh the disadvantages of being an HMO property landlord. 


The cons of being an HMO landlord are as follows:

  • Tenant turnover rate: Since HMO rooms are usually single rooms, there’s a higher turnover rate, which can be unappealing. However, it is quite normal to have high turnovers, especially if your target tenant is a traveler or college student.
  • Risk of damage: Because of the higher turnover rate, there will be more people living in your HMO property. More people equals more potential damage, maintenance, and repairs.
  • Potential conflict between tenants: Even if you do extensive background checks on your tenants and they’re a good fit for you, that doesn’t guarantee they’re a good fit for each other.
  • Requires your full attention: Once again, managing an HMO requires more time on your part, but it’s well worth the monetary reward.

If you have the ability to deal with these cons, then you’re ready to take on an HMO property.


Becoming a Successful HMO Property Landlord

By following the above tips, you can become a successful HMO property landlord. With the right skills, organization, responsibility, and time management, as well as the background knowledge behind HMOs, you’ll be bringing in a steady income in no time.

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