HMOs (House of Multiple Occupancy) can be a very lucrative option for builders and an ideal way to generate as much income as possible from property, according to our property development expert.
If you renovate a four-bedroom house to rent out as a family home, you can expect to make a monthly rental income of up to £1,000 per month, depending on the area, property etc. If you took the same property and made it into a HMO, you would be getting four rents, instead of one and could easily be making double the money for the exact same property.
So why isn’t everyone doing it then?
Because there is a lot more legal tape involved in letting a HMO, and there are not that many letting agencies who are experienced enough to manage a HMO let. However, once you have got past the legal necessities and have shopped around to find a letting agent who knowns how HMOs work, the financial rewards can be huge.
A HMO is classed as a property that is let to more than one person who are not members of the same family. The law for HMOs is changing and most, if not all, HMO properties will require a license from your local authority, so it’s important to check with your local council for details and requirements to be issued with a license. These will vary, but all will require you to follow specific health, fire and safety issues such as means of access and escape.
The most obvious area for a profitable HMO is near a college or university. You will never be short of tenants and, whilst they will come and go when their course finishes, there will always be a new intake every year. The same applies to anywhere where there is a hospital – many trainee doctors and nurses need somewhere to live while they do their on the job training.
The second option for a HMO is wherever there is a large corporate company. Many companies will pay good money to provide their contractors a place to live whilst they are working for them.
The third option is what is often called a ‘half-way-house’. This is a property that councils will recommend for people who might be vulnerable, homeless or on parole. There are a lot more legalities involved for this type of HMO, but it is one of the highest paying property options.
It’s always advisable to get your local authority onboard from the start of a HMO project. They will advise you how many rooms you can viably rent out in your property, what size each room must be, how many bathrooms you have to install, how many heart sensors you need and means of fire escapes on the property.
You also have to have a communal kitchen and dinning area if you are running a HMO.
Have you ever worked on an HMO project? Let us know on firstname.lastname@example.org