How to Convert a Rental or residential Property to an HMO?

How to Convert a Rental or residential Property to an HMO?

An HMO – house in multiple occupations can be profitable for landlords, but you need to think carefully before HMO conversion. Through this guide, you will know all about the legalities and HMO.

What is HMO?

An HMO is a property rented out to at least three or more people who are not from the same family. The tenants share the facilities in an HMO such as kitchen, bathroom, corridors, etc. 

The idea behind converting your residential property into an HMO is known as HMO conversion. It is beneficial for property owners because more tenants can pay higher rent. 

How to Create an HMO: Getting the Right Property

Firstly, you should have a suitable property for it. It is not necessary to create an HMO in a large building but the property should be suitable for tenants. However, bedroom size is important in HMOs because tenants want to spend their time in rooms instead of family-occupied homes. And, the more rooms on the property, the more potential bedrooms for tenants you can convert.

The homes that are larger and have bigger rooms have various advantages in terms of HMO conversion:- 

  • An en suite can be added to some of the larger rooms.
  • You can make another bedroom in place of the dining room.
  • Usually larger homes have more storage space, utility rooms, and larger communal areas, such as hallways.
  • You can convert a sitting room or drawing room into another bedroom.

If you are investing in a property for HMO conversion then how big a property you go for is up to you. However, the purchase price is also the determining factor. Most experts recommend that you should make arrangements with at least five tenants to cover your costs and ensure a good profit. Also, you need to decide whether you will let the whole property to a set of joint tenants or you will let each room individually. If you have a house with five or more beds, then you should let it individually. Also, it will be difficult to find groups of more than four tenants who wish to live together except students.

With the size, location also plays an important role in HMO. If you are planning to let urban professionals then it will be good if you have property within walking distance of an industrial area. 

The Legality of an HMO Conversion

In terms of legal concerns, the two major concerns are gaining an HMO license from the local authority and securing planning permission to perform work on the property for HMO conversion.

Planning permission

For HMO conversion, you must seek planning permission. You need different permission according to the size of the property and the number of tenants. You need to contact local authorities to confirm what permission you require and how to go about getting it.

  • HMO licensing

HMO licensing depends on the number of tenants you let and which local authority your property is in. There are three types of license schemes into which your HMO conversion property could fall. 

Mandatory licensing applies to all HMO properties that include five tenants or more. Additional Licensing schemes extend the requirement to obtain licenses for all HMOs ie. even if you have only three or four tenants. In a selective scheme, all rented properties in an area obtain a license. Most importantly, if your property falls into all these three categories then also you need only one license.

The cost of a five-year license could range from £350 to £850. You or the property management company in London on behalf of you can apply for a license)

What Work is Needed in the Property?

Like any rental property, the building needs to be in good condition. The kitchen needs to be big enough so that tenants can manage easily.

There are guidelines for minimum HMO room sizes that landlords must adhere to. For example, any sleeping room for a person aged over ten must be at least 6.51 square meters. For two people over ten, it must be 10.22 square meters. And for an under ten, it must be 4.64 square meters. Individual authorities may have larger minimum requirements, too. 

Fire safety is paramount, emergency lights, fire alarms, etc are essential. In addition, pest control, locks for all bedrooms, carbon monoxide detectors, regular cleaning of communal areas, and multiple bedrooms with basic amenities are also ut for HMO conversion. Accordingly, you or your property manager need to:-

  • Find HMO Tenants
  • Create Individual Tenancies
  • Budget and Rewards

Final words:- With the proper planning and following all the legal formalities and guidelines, you can successfully do HMO conversion. However, you can contact for services of property management in London for HMO conversion, HMO licensing, etc. For more information, regarding HMO or any property, you can contact us freely.

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