HMO Myths – 5 Myths Busted!

HMO property myth No.1, is that there is an oversupply of HMO's everywhere, and so you shouldn't do HMO's. Well, let's be honest; there are lots of HMOs. So in most areas there might be a little bit of an oversupply. But if you look at the stock that's available, by going onto spareroom.co.uk, you'll see that most of the accommodation available is very average. They are very plain HMOs. I believe that if you have good HMOs, then you should always be able to find tenants to fill them.

So yes, if you're trying to do a very average, 'bog- standard' House of Multiple Occupancy, there is an oversupply. If you're doing the higher end, better quality, people will always want those. They will then be prepared to pay more money to live in a better quality property.

HMO Property Myth No.2,is that HMOs are a lot more work than Single Let properties. I would agree. One HMO is more work than one Single Buy to Let property. But if you look at the income you can create from a good HMO, it's equivalent to four or five single let properties.

So to make a fair comparison, you should look at the amount of work involved with one HMO. This is in comparison to four or five Single Lets. I would say a HMO is not actually that much work.

When you know what you're doing, and you have great systems in place, it needn't take much time to have your HMOs up and running.

HMO Property Myth No.3, is that every HMO needs to have a HMO licence. That's simply not correct. Technically an HMO property, is a property that has three or more unrelated people living in it. However, not all HMOs need licensing. The government guidelines from October 2018 make this clear. If you have a property with five or more tenants then you need to have an HMO licence.

Some local councils interpret it in a different way, they say three or more tenants and you need an HMO License. So the key here is to contact your local council, the HMO licencing department.  Speak to them and understand what are the requirements in your area. If your HMO property does need a licence, it means you have to fill in an application form. You have to provide a floor plan of the property, to say where the fire doors are, and the smoke alarms, etc. You need to make sure the property is setup correctly with all the safety requirements.

I believe you have a moral and ethical responsibility, as well as a legal responsibility to make sure you're providing safe accommodation. This is for all of your tenants.

HMO Property Myth No.4, is that all HMOs need planning permission. Again, this is not correct. So let me explain planning to you, and it's a little bit complicated. But I'll try and keep it as simple as possible. So if you have a larger HMO with seven or more tenants, it's no longer seen as a residential property. In fact it's its own planning clause called, Sui Generis.

In that case you would need to apply for planning permissions, to get a change of use from a residential into Sui Generis, for seven or more tenants. If you have a smaller HMO, up to six tenants, then in most areas of the country you could do the following. Take a normal house, convert it into an HMO for up to six tenants, and you can use what's called permitted development. This means you do not need to get planning permission, unless it's in an Article 4 area.

Article 4 has come into some parts of the country, it is coming into some parts, and in some parts it will never come in. The local councils who've applied Article 4, don’t want any more HMO properties in the area and so with Article 4 they have withdrawn the permitted development right. Therefore, in and Article 4 area, if you want to take a normal house and convert it into an HMO for up to six people, you actually now need to get planning permission.If you apply for planning permission in an Article 4 area, it will be automatically refused.

However, if your property meets all the criteria, then you might be granted planning permission if you go to appeal. The other thing is, in an Article 4 area, you can actually buy an existing HMO. You could then apply for a Certificate of Lawfulness. This is if it has been used continously during that time as a HMO. After this, you don't need to get planning permission.

In summary if you are investing in an Article 4 Area, the key here, is to speak to the local council. But this time you want to speak to the the planning department. You want to find out when Article 4 came in, so you know how long you have to make sure you got the correct records for.

If Article 4 isn't in place, find out, are there plans for it to be coming in? If so, when is that the case? In which case, if you're taking a house and turning it into an HMO, you need to make sure it's finished and tenanted before Article 4 starts in that area.

Another tip for you here; if you look at the boundary on which Article 4 lies, there might be a street which might be perfect for HMOs. Half of the street is within the Article 4 boundary, and the other end of the street is not Article 4. That end of the street you could absolutely do HMOs, and it might be a perfect location. So always look at the streets on the boundary, of the Article 4 area.