What is a HMO Property?
January 4, 2024
An HMO property, which stands for House in Multiple Occupation, is a type of residential dwelling in the UK where several tenants live together and share some common facilities. Here’s a breakdown of the key points:
Basic definition:
- At least 3 tenants who are not considered a single household (e.g., family) live in the property.
- Tenants share some common facilities like bathrooms, kitchens, or toilets.
Types of HMOs:
- Small HMO: 3 or 4 tenants sharing facilities.
- Large HMO: 5 or more tenants sharing facilities.
Licensing requirements:
- Small HMOs in England and Wales generally don’t require a license unless they’re converted flats or contain certain safety hazards.
- Large HMOs almost always require a license from the local council.
Additional details:
- HMOs can take various forms, including shared houses, bedsits, hostels, private halls of residence, and converted flats.
- Specific rules and regulations regarding HMOs vary depending on your location within the UK (England, Wales, Scotland, or Northern Ireland).
Resources for further information:
- GOV.UK: Houses in multiple occupation: https://www.gov.uk/find-licences/house-in-multiple-occupation-licence
- Petty Son and Prestwich: What Is An HMO Property?: https://www.pettyson.co.uk/about-us/our-blog/416-what-is-an-hmo-property
Benefits of an HMO Investment
HMO properties can be attractive investments for several reasons, but it’s important to weigh the pros and cons carefully before diving in. Here’s a breakdown of the potential benefits:
Higher rental yields: Compared to single-occupancy lets, HMOs can generate significantly higher rental income. You can rent out individual rooms to multiple tenants, potentially bringing in two to three times the rent you’d get from a single household in the same property.
Reduced void periods: With multiple tenants, the risk of an empty property and lost income is lower. If one tenant moves out, the others can still cover the rent while you find a replacement.
Capital appreciation potential: HMOs, particularly in areas with high demand for shared accommodation, can appreciate in value over time. This can be due to factors like increasing rental yields, limited housing availability, and gentrification.
Tax benefits: Depending on your circumstances, you may be eligible for certain tax benefits associated with owning an HMO property. Consult a financial advisor for specific details.
Other advantages:
- HMOs can be easier to manage than multiple single-occupancy lets, as you have one property to deal with instead of several.
- They can offer a good way to invest in property with a smaller initial outlay compared to buying multiple properties.
We have specialised in HMO Investments for over 30 years.
If you are looking to invest in an HMO property we are more than happy to help. You can contact us or use the form below to schedule a call back.