Essential Responsibilities Every HMO Landlord Must Know: Are You Covering All Bases?

HMOs can be a lucrative yet risky business—so how do you go about preparing your property with confidence? We have created a hassle-free HMO Landlord Checklist to help you fulfil your responsibilities and meet your targets. Being ready for official scrutiny requires insights and good management tactics. However, to reach the standards of a profitable HMO, you need to go above and beyond for your tenants. This checklist highlights the three pillars of HMO requirements: planning, building regulations, and licensing, with a bonus package of first-hand insights shaped by years of experience in HMO investment and design.

WHY YOU NEED AN HMO LANDLORD CHECKLIST

Imagine this: You’ve bought a house in multiple occupation (HMO), spent a lot of money on refurbishment, and are very excited to get your first tenant. But you soon learn you didn’t cover all your bases. You missed perhaps provisions for the HMO licence, neglected to get a building control certificate, or your fire assessment is inadequate. At this point, wishing you had a comprehensive HMO action list to guide your project may be too late. Disregarding HMO regulations can harm your investment plans and even turn your investment into a liability.

Observing HMO regulations helps you keep your tenants safe, get on the council’s good side, and sleep better at night—not to mention saving you additional expenses from having to redo any renovation work.

1. CHECK IF YOU NEED HMO PLANNING PERMISSION

I’ve seen many investors underestimate the complexity or ignore the HMO planning process, only for it to come back later and haunt them. The local authority is very strict about protecting the safety of the occupants in an HMO and the impact of HMOs on the local area.

Whether you need planning permission depends on the number of occupants intended for the HMO, the property’s current use class, and whether there is an Article 4 directive within the local area. If you don’t know  what Article 4 is, it’s the Council removing Permitted Development rights (PDR) within an area.

If your HMO will house between 3 and 6 occupants, and there aren’t Article 4 restrictions, you can convert a property from Class C3 (single let) to C4 (HMO) using Permitted Development. However, it’s recommended that you get a Lawful Development Certificate. This is evidence that you carried out a conversion in line with PDR. Additionally, this certificate can prove valuable in a mortgage application, and insurance should the council enforce Article 4.

If your HMO is planned for more than 6 occupants, you’ll need to get planning permission for your HMO conversion regardless, as large HMOs are classed under Sui Generis. Similarly, in areas with Article 4 in place, you must seek HMO Planning Permission.

The Council might allow retrospective planning if you didn’t get planning permission before starting or completing the conversion work. However, if the retrospective approval is unsuccessful, the local authority may issue an enforcement notice to restore the property to its previous condition. In some cases, failure to comply can lead to prosecution in a court of law.

2. CHECK IF YOU NEED BUILDING CONTROL

The next item in your HMO checklist is building regulations. Building Control is the formal approval from the Government or Local Authority permitting the construction or change of property in specific ways.

The standard building regulations for HMOs apply to up to 6 occupants. This involves complying with stringent HMO Fire Regulations, which include a fire risk assessment, smoke detectors, and fire detection alarm systems. The regulations also outline the rules for installing HMO Fire doors (kitchen, living room, bedrooms) where necessary.

You’ll also need to meet the HMO Kitchen Requirements. These rules specify the approved standards for room size, cooker, extractor fans, sink, etc.

For larger Sui Generis HMOs, sound quality testing is necessary to meet acoustics requirements, in addition to standard building regulations. Each bedroom, bathroom, and floor in the HMO must be within satisfactory acoustic levels, for which good sound insulation is necessary.

Considering these controls early and throughout the HMO development process is essential to ensure a smooth building regulation sign-off. For instance, any structural alterations to the building require a structural engineer to certify the work is delivered to the highest quality and standards. Also, part of the building process is the ventilation requirement. HMOs must have adequate ventilation in all rooms, bathrooms, and common areas, which involves mechanical and natural ventilation.

If you have questions or need advice on your specific case, our team will be more than happy to help you.

3. IDENTIFY WHEN YOU NEED AN HMO LICENCE 

Knowing how HMO licensing regulations work is essential regardless of what people say —it’s a non-negotiable if you’re eying the HMO model for your property. This information will prove valuable at some point in your HMO journey, whether you’re looking to grow your property portfolio or hit a roadblock. You can build a solid understanding of why and when you need an HMO licence,  but for now, let’s cover the basics for our checklist.

In a nutshell, if 3 to 4 unrelated occupants live in the property, “selective” licencing applies. This means enforcing an HMO licence is entirely at the Council’s discretion. If you have 5 or more occupants, “mandatory” licencing applies. This means you must get an HMO licence.

Depending on the area and complexity of your HMO, the licence cost can vary from £400 in a small town to £1,500 in a large city. An HMO licence is generally valid for 5 years.

As an HMO investor and architect, I advise you to get an HMO licence, which provides complete peace of mind. It also gives your tenants confidence that you’re a high-quality landlord who takes the regulations seriously. If you need any help with HMO Licensing, please reach out to our team at HMO Architect; we’ll be glad to help you.

It is important to note that an HMO Licence is not transferable from one Landlord to another. So, if you are buying an HMO from another investor, regardless of whether an HMO Licence existed, you must apply for a brand new one under your name.

BONUS 1:  DOCUMENTATION (BEST PRACTICES FOR HMO LANDLORDS)

One of the top things I’ve learnt from investing in property and speaking to hundreds of investors is how vital paperwork is. Although it may sound trivial to many, an adequate record can help smooth the transition from one stage to another and reduce hiccups in the process.

Having the correct certificates shows the Local Authority that you’re a professional and serious investor who cares about your tenants’ safety and well-being.

Other essential certificates or paperwork you should obtain include the Gas Safety, Electrical Installation and Energy Power (EPC) certificates.

Regarding best practices, it’s worth mentioning some landlord rules that may not be all too obvious. For instance, giving notice before entering the property is not just about good manners; it’s a legal requirement, with exceptions to address safety or hazard concerns. It would be best if you also clear the rules and inform your tenants of their responsibilities.

BONUS 2: IS YOUR HMO FEASIBLE (DO THE NUMBERS WORK)?

This is your first step as an HMO investor and one of the most critical points in your HMO rule book.

Make sure your numbers work —there should be enough budget for refurb, planning, building regulations, licensing, etc., and a ground plan to cover HMO management costs that realistically project rental income. It’s also essential to plan for delays and factor the financial impact of any borrowing, such as bridging finance or investors.

Your investment plan won’t be complete without an exit strategy. Be as specific as possible and include the criteria for when to sell and capitalise on your investment or to mitigate risks (e.g. cut and prevent losses).

If, at this point, you’re still assessing your possibilities, our HMO Conversion guide gives a holistic view of what to consider when deciding whether to convert a property to an HMO.

BONUS 3: UNDERSTAND THE MARKET DEMAND (AND YOUR IDEAL TENANT)

Tenants are the lifeblood of your HMO and your source of cash flow. Your ability to find and carefully examine possible tenants is one of the skills you’ll develop as an HMO investor and one to pay attention to. You should define your target tenant even before you buy the property. In our top design ideas for HMOs, you can find a simple four-step guide to identify your target tenant.

Your target group also depends on the area where your property is located. Consider whether your HMO will have the ideal location for a factory, warehouse, airport worker, professional employee, student, etc.

Before you buy the property, you must research the market in detail. A known strategy is to put a dummy ad on SpareRoom, Badi or Gumtree, then test for demand by rating the responses based on the tenant profile you’ve defined.

A good practice is speaking to HMO management companies and engaging with a reliable agent who can help you find and vet tenants. You can set expectations and contracts for them to manage your properties within the local area. I recommend trying to get a recommendation and doing your due diligence before working with anyone.

Lastly, don’t forget to have a solid HMO tenancy agreement before any tenants move in.

BONUS 4: GET YOUR MARKETING RIGHT

Having high-quality marketing material to show off your HMO will attract quality tenants. We live in an age where promoting is critical to a business’s survival.

As a personal property investor, you’re up against companies who spend a ton of resources staging properties. However, promoting properties has never been more accessible than today, thanks to more efficient avenues like video and remote viewings.

Imagine a 3D Virtual Tour or 3D model of your property made just before completion, showing the right furniture, illumination, and style to convince your ideal tenants. That’s all possible. Here’s an example of a 3D Virtual Tour for one of our properties.

Do you want a visual even earlier? During the concept phase, you can opt for a CGI (computer-generated image) of the property or room quality.

Besides getting the attention you want, all these strategies also help your HMO stand out against low-quality rooms that attract highly price-sensitive tenants. After all, we’re in this for the long term, and quality tenants who pay for quality rooms are crucial to building a sustainable business and keeping turnover and other related issues under control.

Do you know your obligations regarding heating regulations? While this isn’t part of the marketing process, the heating system should be on your priority checklist, as you will need to budget for the initial outlay and plan maintenance and upgrades. HMOs must maintain the standards for housing and tenants’ rights. This topic grants a thorough review, so add it to your list.

BONUS 5: GET INSURED

Murphy’s Law states, “Anything that can go wrong will go wrong”. Many things can and will go wrong in a journey and career as an HMO investor. Complications with HMOs can be anything, from non-paying tenants to midnight boiler emergencies, damage or, worst case, even a fire. You can see how some of these can have a ripple effect with severe consequences.

Getting the right insurance that covers all or most of these issues will give you complete peace of mind. Yes, it will reduce net positive cash flow, but it’s so worth it and essential if you’re serious about your investment.

If you’d like to speak to an HMO insurance broker, we’d be happy to recommend a few and connect you.

DOWNLOAD OUR HMO LANDLORD CHECKLIST

Keep your HMO compliant and running smoothly with our HMO Landlord Checklist. Download and print this checklist to make sure you cover all legal, safety, and operational steps.

TAKEAWAYS

• Check whether you need HMO Planning Permission. This depends on the number of occupants in the property, the use class, and Article 4 restrictions in the area. In this case, the key deliverable is a Planning Decision Notice.
• Check whether you need building regulations and appoint a competent firm to guide you. In this case, the key deliverable is a Building Completion Certificate issued by the Building Control Company.
• Apply for HMO licensing based on the number of occupants. It’s advised to get an HMO license and stay compliant. In this case, the key deliverable is an HMO Licence document issued by the Local Authority.
• Do your numbers and complete a thorough budget.
• Have an exit strategy in place.
• Due diligence before and during the life of your HMO project will help you understand the market and how best to promote your property.
• Get your ideal tenants and your tenancy agreement right.
• Hope for the best, prepare for the worst—don’t ignore the HMO-associated risks and secure insurance for your property.

I hope this HMO checklist helps you get your HMO up to code before renting it out. Understanding the importance of HMO planning, building, and licencing and when you need them during the process is essential to avoid costly mistakes. Covering these bases should help you complete the project on time and, hopefully, on budget.

Give your project the best possibilities, and  talk to one of our architects for a free consultation. We’ve advised many HMO landlords, helping them through the process as their trusted consultants on numerous successful projects.

Get in touch. We’d love to help you.