Introduction to HMOs

Rising Damp isn’t just a sitcom of the 1970s, but alive and well in the 21st century.  Rigsby has retired and been replaced by a new breed of landlord recognising above average yields by letting out houses to multiple strangers on a room by room basis.  It’s not an armchair investment!

I like my tenants and appreciate that each and every one of them has a story to tell, but putting 5 strangers in one house and expecting them to share a bathroom and kitchen nicely is like asking a group of toddlers to take turns banging a drum.


So, what is an HMO?  It’s an abbreviation for House of Multiple Occupancy.  This means that the house is shared by people which represent more than one household,  i.e. anyone who has a different surname and is not in a relationship, and has access to shared areas such as kitchen, bathroom, hallways.

HMOs only need to be licensed if they are 3 or more storeys tall with 5 or more tenants sharing.  Check with your local council’s Environmental Health Department if your property needs to be licensed and they’ll tell you what hoops to jump through.  If it sounds daunting, don’t worry.  It may require a bit more investment, some serious schmoozing with council officers but at least you’ll be legal and above board.

Why did I choose HMOs?

Actually, they chose me.
Having successfully renovated several houses during the boom years, navigated 2 children through pre-school, set up and run a B&B it was decided to use the equity to jump on the Buy To Let bandwagon/bubble.  However, the days of easy money through owning property are over for the moment, sticking money in the bank won’t get me excited so I was looking for high yield rentals.

After scouring the area for property and seeing hundreds of flats, family houses, bedsits, etc. the number crunching was dull as nothing gave a particularly interesting return after paying mortgages, etc.  I was eventually persuaded to look at an unassuming house which came complete with tenants – most of which were in bed when we visited.  The agent looked perplexed AND embarrassed and said she’d try to find out more about how the house was set up from the owner.  Rooms were rented for between £65 and £85, all tenants were on a license and that was as much information as I was going to get!

The Reality

When I started I thought it was just a case of “give me the money and I’ll pay the bills then cream a little bit of profit to go towards my next holiday”.  How WRONG!  It has only been through trial and error, threatened court action, unfounded allegations by tenants against me and a well known local criminal telling ME his rights that I finally think I’ve nailed it.

And so the story begins…………………….

4 responses to “Introduction to HMOs

  1. clare glenn

    Hi there! I’m just starting from the very beginning, doing plenty of research before making a definite depiction on weather to go ahead. it’s easy for me to do spreadsheet after spreadsheet of figures, but I’d like to know a few of the big problems I’m likely to come across and where do I actually start?. I’m looking at an area that has been and continues to grow, so from that side of things it is a sound investment. Thank you for your time. clare x

    • Hi Clare. Thanks for reading. Start with: who is your market and how much are they prepared to pay? Then look at the minimum amount you need to run the house (mortgage, bills, voids, maintenance). The difference will be your profit and only you can decide if that’s enough to make it worth your while! As for problems: there are no crystal balls and you just have to jump in with a bit of faith and lots of common sense. Make sure you understand the regulations and treat it like a business i.e. look after your clients and don’t get greedy. Hope this helps!

      • clare glenn

        Thank you for that! since leaving this message, I’ve been doing a lot of research, putting mortgage in principles in place, talking with a very helpful mortgage broker, arranged meetings with other HMO landlords in my area and found a couple of potential properties! I don’t want to get ahead of myself, but I’m very excited! I’ve seen your last piece of advice in quite a few of you’re comments to people, and it’s certainly something I hope never to become – greedy! Thanks again x

      • Good luck! I hope all goes well and it’s a very exciting journey !

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