The larger properties are ideal for an HMO conversion. Because these types of properties can be profitable to invest in and rent out to tenants. However, it can also be quite complicated and need hard work to manage. That’s why many of our clients invest in such properties and hire our property management services to manage them.
The property boom is occurring across the UK, investors instead of purchasing standard houses prefer conversion of this type of property as well as other former use commercial properties such as hotels, B & B’s, and guest houses.
It is not always a simple process and there are some legal things you need to consider. However, we have written a short guide on HMO conversion. So, let’s get started with the basics.
What is HMO?
HMO stands for House in Multiple Occupations. The HMO property is rented to at least three tenants who are not a part of the same family and use shared facilities such as a kitchen, terrace, balcony, Bathrooms, etc.
In terms of HMO, the word household describe different types of renters such as:-
- A single person
- A couple in a relationship
- A married couple
- An entire family
So, for instance, if three unrelated single people live on the property and share common facilities, make it an HMO property. You should notice that, if you also live on the property like other tenants and share those facilities with them then your property is not classed as HMO.
What are the benefits of HMO?
HMOs can maximize your investment with current estimates indicating that HMO Landlords can yield 8% more profits than traditional single-let landlords. No doubt, there are so many landlords who have opted for HMOs.
HMOs are beneficial to generate a more stable income, even if tenants create issues in paying rent.
For example, if one of your tenants leaves the property, your pocket would not get affected if you have hired a property management company in London with a guaranteed rent scheme. The company will not only manage your property but also find tenants, collect rent, resolve their issues, handle legal work, and much more.
Most importantly, you will get fixed rent even when tenants leave the property.
HMO conversion of your property can be a pricy procedure but the yields are almost always worth it. Housing is the largest community in our larger cities.
HMOs can directly benefit from this market because consumers have an increasing need to find affordable rental accommodations. And, HMOs are the best for smaller spaces at lower prices. It is especially good for towns and cities that have a strong student community. Also, with growth in the industrial area, HMOs will continue to grow.
How you should do HMO conversion of your Property?
As a landlord, HMO conversion often takes time and effort. Because your property needs to be changed to make it suitable for multiple tenants. Also, you need to make sure that you follow the government regulations for HMOs. Investors are usually unaware of the policies and regulations. But property management companies managing properties also guide you to follow government regulations.
The UK government requires you to hold an HMO license for any residency with at least three tenants This law is changed from the housing act of 2004, where you would only need a license if your HMO was at least three stories high and had more than three residents.
To apply for an HMO license, you just need to contact your local authority, and they will send you a form to fill out. If you have a large HMO, your property will need to be inspected to ensure it is safe and fit for multiple tenants.
Now, as you know all the regulations you must follow while HMO conversion. It’s time to make make your property HMO ready. This can take time and effort. However, it will be worth it with the potential returns through it. In some cases, you need to do renovations work too. Once completed then you need to do promotion, screening of tenants, and much more. You should hire one company for all your solutions.
HouseManage is a property management company in London that helps you in getting an HMO license, HMO conversion, renovation, screening, budgeting, finding tenants, rent collection, etc. For more information, regarding HMO conversion, renovation, maintenance of your property, and property management services, you can contact us freely.