Broker Guide: HMOs

Broker Guide: HMOs


The fundamental performance of any property investment is underpinned by the level of income it produces. Houses in Multiple Occupation (HMO) are known to produce a good return and are seen by investors as strong cash cows, which has led to an increasing number of properties being converted into multiple-income producing units.

Given the shortages in the supply of housing options in today’s market, HMOs are fast becoming a viable solution from both a landlord and a tenant perspective. With this in mind, Jason McGee-Abe sought the expert advice of Hinesh Varsani, Partner at Belleveue Mortlakes, to find out everything you and/or your clients needs to know…

Before considering any property conversions or purchases, the planning requirement and licensing intricacies must be explored in order to understand what defines an HMO and any potential financial implications.

So what constitutes an HMO?

Properties of HMO status and licensing criteria are governed by the Housing Act 2004 and apply to those dwellings that involve sharing part of the accommodation. They are not dependent on planning applications, rather how the accommodation is occupied.

HMOs can be broadly categorised into the following:

- A house split into bedsits where each tenant has exclusive use of their room but with a shared kitchen or bathroom/WC;

- A house/flat share with more than three tenants, not related to each other;

- Students living in shared accommodation with exclusive use of the entire house;

- An owner-occupier housing more than two lodgers with a licence.

Additionally, a new category was introduced to incorporate a building converted into flats prior to the 1991 Building Regulations, known as Section 257 HMOs; under this directive the defining requirement is that at least one third of the flats are let on Assured Shorthold Tenancies.

HMOs were issued a separate use class (C4) under the Town and Country Planning (Use Classes) Order 2010, identifiable by having a minimum of three people sharing.

I own/manage an HMO, what do I have to look out for?

Properties falling within HMO classification must comply with various requirements. Failure to do so can result in enforcement action or, in severe cases, prosecution. The following table outlines briefly the factors that landlords must take into consideration:


Number/location of shared facilities per person.


There are basic management practices which are outlined in the Management of Houses in Multiple Occupation (England) Regulations 2006.

Safety measures

Fire safety measures including detection and escape provisions.

Water supply and drainage

Water supply to be protected from frost, tanks and cisterns to be covered.

Gas and electricity

Supplies to be maintained with gas safety certificates issued every year and electrical safety certificates every five years.

Communal elements

Common areas and utility services/appliances to be kept free of obstruction and in good order.

Living accommodation

Each habitable room to be kept in good order and regularly maintained.

Communal outbuildings

All outbuildings and gardens to be kept in good order, safe and tidy.

Waste disposal facilities

Sufficient provisions to be made for storage of refuse.

Information to occupiers

The HMO manager’s contact details to be readily available to all residents.

Duties of occupiers

Comply/assist the HMO manager to carry out his/her duties and fulfil their obligations and treat premises in a tenant-like manner.

HMO Licensing

Individual Local Authorities will have differing requirements based on the Housing Act 2004 to apply for a licence (normally valid for a period of five years). Licenses are issued to a person(s) deemed to be fit and proper, be it the landlord or his nominated manager/agent, with adequate management arrangements so that the HMO is in good order.

The necessity of a licence is dependent on the following criterion being fulfilled:

- The building is three storeys or more in height (including basements and any commercial units within the property);
- The property houses more than four occupiers;
- Some or all of the occupiers share a facility (kitchen, bathroom or WC).

For full and detailed information it is recommended that you contact your Local Authority to determine the specific regulations that apply in your area.


It should be noted that if your HMO does not fully comply with all statutory regulations, its capital value may be adversely affected.

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