HMO Management Basics For Letting Agents And Landlords
HMOs (Houses in Multiple Occupation) comfortably out perform single letting units for rental returns, but this comes with a catch. This sector is now heavily regulated and requires professional, organised management to meet tenant safety and licence obligations. Get this wrong and landlords face fines measured in tens of thousands of pounds.
The first thing is to be clear on definitions.
What is a Licensable HMO?
The Housing Act 2004, defines a house in multiple occupation (HMO) as a property rented by at least three people forming more than one household, sharing facilities.
‘Household’
A single household is defined as:
· a family, for example a couple (whether married or not and including same-sex couples) or persons related to one another
· an employer and certain specified domestic employees
· a carer and the person receiving care
· a foster parent and foster child
A family or couple would be considered a household, while friends in a house share would not.
HMO licences usually provide two maximum figures for occupancy, one for ‘persons’ and one for ‘households’. For example a licence might allow 5 households but 9 persons.
For large HMOs (five or more people forming more than one household, sharing facilities), licencing is mandatory.
Local Authorities can also impose additional licencing for smaller HMOs as part of a wider housing policy and selective licensing for specific streets.
Space and facilities must be suitable for the number of occupants. The minimum room size for an adult is currently 6.51 square meters. Normally no more than five adults are allowed per kitchen.
What about the landlord?
The person controlling the property - either the landlord or the agent - must be ‘fit and proper’. This means no criminal record or previous breaches of property laws.
Legal obligations
Here’s a list of the legal requirements for HMO landlords:
Landlords must:
- Display a notice within the property detailing the manager’s name, address, and contact number.
- Carry out regular health and safety inspections in line with safety rating systems, keeping records of all inspections and work done.
- Ensure the property is not overcrowded.
- Provide working smoke alarms and heat detectors in kitchens as well as keeping fire escapes clear.
- Carry out fire safety risk assessments out in accordance with The Regulatory Reform (Fire Safety) Order 2005, keeping records of significant findings.
- Maintain clean water supplies and proper drainage and protect pipes from frost.
- inspect electrical equipment at least once every five years and keep records of the report.
- Supply a gas/electrical safety record within a week if requested by the council.
- Maintain cleanliness and safety in all communal areas
- Keep exteriors and interior of the property in good order.
- Provide (at least) the legal minimum number of shared bathrooms and kitchens.
- Carry out regular legionella risk assessments.
- Maintain specialist HMO landlord insurance policies.
Tenants must:
- Allow their landlord reasonable access and provide all information requested
- Act in a ‘tenant like manner’ so as not to damage items provided by the landlord.
- Follow guidelines specified by the landlord for refuse and fire-safety.
Penalties
Landlords breaching licence or safety requirements can expect fines of £5,000 per offence and civil penalties up to £30,000. Prosecutions are brought in the Magistrates’ Court.
It will be obvious from this overview that managing an HMO is now a highly professional business requiring support from a team of qualified and reliable professionals. Management in this sector is no longer something a landlord can deal with on his own.
