If you are investing in one or more Houses of Multiple Occupancy (HMOs), there’s a great deal of due diligence required to identify an appropriate property. HMOs are a solid investment opportunity and a great way to secure regular income. However, without a proper appraisal beforehand, an HMO investor may have to fork out the cost of making sure a property is compliant with HMO legislation and fit for the needs of the tenants.
Remember – if people don’t want to live there and the HMO is not consistently occupied, you won’t get a steady income from rent. This blog will give tips to property investors like you on what to look for during your property viewing, so you can decide what the risk will be of investing in this HMO.
Before you visit, ensure you have studied the area and know what type of tenants you will be trying to attract. The needs of factory workers may be different from those of nurses, young professionals or students. Also familiarise yourself with the relevant legislation and the rules of the HMO local authority, as this can change over time. Have your ideal tenant and the legislation in your mind as you view the property, as you will have a better idea of the amount of work required to create a profitable HMO.
Structural Integrity and Condition of Your HMO
Some of the most obvious qualities to assess are the condition of the internal and external structure. Check for damage to walls, the foundations and roof. Make note of any signs of wear, cracks, or structural issues. Be extra aware of any signs of damp. Check especially around plumbing fittings.
Check all windows and doors are properly sealed and in good condition. Make sure they have secure locks.
It is also important to check insulation and water pressure.
Room Sizes and Layout
Bedrooms
There is very specific legislation around the size of HMO rooms. This can vary between area, so you should check with your local planning authority.
Each bedroom in an HMO cannot be smaller than 6.52m2 for one person. You can only measure the floorspace in areas where the ceiling is more than 1.5m from the floor.
Some local authorities require a room height of 2.1m as a minimum.
Kitchens
In general, a kitchen needs to be 7m2 for HMOs with 5 tenants or less, and 10m2 for HMOs with 6-10 tenant. If your HMO property has more than 10 tenants, it requires a second kitchen. There will also be legislation about the cooking facilities, sinks and worktop size, which will vary based on location.
Bathrooms
The legislation states ratio is 1 bathroom to every 4 tenants – although again it can vary between councils. However, inadequate toilet facilities can be a large source of discomfort for tenants and a reason they vacate properties. To keep HMO tenants happy, more toilets are better. A ratio of 1 toilet to 3 tenants is recommended, though not always doable.
Fire Safety
Ensure that fire doors with self-closing mechanisms are installed on all bedrooms and high-risk areas like the kitchen. High-risk areas should also contain fire safety equipment like fire blankets and extinguishers. There should be functioning fire alarms and carbon monoxide detectors in appropriate locations and fire exits need to be clearly marked. These should come with a fire alarm certificate. If you invest in this HMO, you are responsible for ensuring it meets fire safety regulations.
Electrical and Gas Safety
Check all appliances and sockets for any sign of ware and tear. Ask to see and Electrical Installation Condition Report (EICR) and a Gas Safety Certificate.
Security
To help your tenants feel more secure, additional security modifications may be required. For example, CCTV and good outdoor lighting.
Licence
If the property meets all the HMO regulations, it may already have an HMO licence or you should be able to apply for one. If the property requires some conversion, check if those modifications will require planning permission and if it is likely to be granted.
It is likely that any property you visit will require some level of work in some of the areas discussed in this blog. HMOs rarely come risk-free. However, this checklist should help you calculate if the level of investment required from you to create a profitable HMO. With this knowledge, you can calculate if the property is a viable HMO investment opportunity or if you should invest your money elsewhere.
