6 Top Tips For First Time HMO Landlords
Top Tips for HMO Landlords
HMO properties remain an enticing choice for tenants and landlords as they offer many advantages to both. HMOs are often more profitable than other types of rentals, yet more affordable for tenants, making this service a win-win for both parties. Nevertheless, these benefits come with added challenges for landlords to protect renters. That’s why we have a short guide to help you.
Relo has all the top tips for HMO Landlords to keep your tenants happy and your pockets full!
Acquire an HMO Licence
It is illegal to rent out a licensable HMO without obtaining a license, and failure to do so can result in significant fines ranging from £10,000 to £30,000. To obtain a license, you must apply to the LHA, who will conduct an inspection of your property.
Cost of HMO license
The cost of an HMO license varies depending on location, typically ranging from £300 to over £1,000 in certain areas of London. The license is valid for five years and must be renewed thereafter.
House-in-multiple-occupancy mortgages (HMO mortgages) are designed for landlords who wish to rent their property to a group of tenants who are not related or part of the same household. Typically, if you plan to rent your property to three or more individuals, you will require an HMO mortgage.
It’s not advisable to rely on standard buy-to-let insurance deals as HMO properties often require specialized coverage. Due to their perceived higher risk, some insurance providers may not cover them, but there are still many options available.
Ensure your insurance covers:
- The building,
- The contents
- Any loss of rent if the property is damaged or destroyed.
Additionally, be wary of tenants subletting rooms in your property as this could invalidate your insurance policy.
The Management of Houses in Multiple Occupation (England) Regulations 2006 explain the numerous rules and regulations that HMO landlords must follow.
These stipulate that landlords must:
- Follow HMO fire safety rules.
- Provide the landlord’s contact details to the tenants and display them on the property.
- Maintain a supply of gas and electricity.
- Test gas appliances every year
- Test electrical appliances every five years.
- Verify the property is clean and up to standard before occupants move in
- Maintain common areas, fixtures, fittings, and appliances.
- Provide waste disposal facilities.
HMO inspections should be carried out regularly to guarantee that safety and maintenance issues are managed. Landlords must respond promptly to any tenant’s reported faults or issues.
Pick the Right Tenants
Tenants who get along can create a harmonious household, benefiting you as a landlord by reducing conflicts and property-related issues. Seeking tenants with similar lifestyles can minimize disputes and result in longer tenant stays, leading to fewer vacancies.
If you are satisfied with your current tenants, it may be wise to involve them in the screening process for new tenants. This approach can help ensure that new tenants are a good fit for the household, potentially leading to a more positive experience for everyone involved.
It’s important to have a written tenancy agreement for each person residing on your property. Room-only agreements allow landlords to have regular access to common areas of the house, unlike other types of tenancy agreements.
Short-hold tenancy agreements typically last for 12 months, with a 6-month fixed period where neither party can end the agreement without violating the tenancy policies.
In 2023, we can expect numerous changes across various industries, with both positive and negative impacts. If you’re new to the HMO market and feeling overwhelmed, don’t worry! Contact us at Relo for expert advice, information, and management services. We’ll guide you through the process and help you make the most of your HMO investment. Get in touch today!