How to convert a property into an HMO
What to know and consider if you’re thinking of converting an existing property into an HMO
Many HMO landlords start off as single let landlords and then move into the HMO property sector as they gain experience, to maximise rental income.
If you’ve weighed up the pros and cons of becoming an HMO landlord and decided to take the plunge, you may be looking to convert an existing rental property into an HMO.
The first thing to be aware of is that each local authority will have its own planning and licensing policies that may limit the location and number of HMOs they will permit.
So, before you begin any work to convert a property into an HMO – and ideally before you buy – it’s essential to speak to your local council to find out the specific requirements for HMO properties in your area.
If you are able to operate the property as an HMO, it’s likely that you will have to carry out works to provide accommodation that’s suitable for multiple individual households.
The space, layout, amenities, furniture and appliances must all be considered; you will have to comply with building regulations and you may need planning permission for change of use.
To make sure your conversion is both suitable for tenants and legally compliant, it’s advisable to work with local experts, such as an architect and planning consultant, who can liaise with the council on your behalf.
Under planning regulations, buildings are divided into different ‘Use Classes’. And while residential homes occupied by single households are categorised as ‘C3’, HMOs fall into their own ‘C4’ class.
That means if you want to let a property as an HMO, you may need to apply for planning permission for change of use – and there’s no guarantee the local council will grant it.
So, before you buy any property you intend to let as an HMO, it’s essential to find out about your local authority’s planning policy.
Speak to the council directly and get in touch with local landlord groups to get advice from other HMO investors.
Speak to your local council to find out about their requirements for change of use planning permission, HMO licensing and required amenities before you begin any work
Set a budget for converting your property and make sure the project is viable – i.e. that you’ll recoup your investment check
Make sure you’re compliant with HMO requirements – illegal HMO conversions can result in hefty fines, so make sure all work is carried out by suitable contractors and building regulations are signed off by the local council
Tell your insurer and your mortgage lender about your plans to convert your property into an HMO so that they can make sure you have the right products and are adequately covered
Identify your target tenants and make sure you convert the property to meet their needs - for example, if you’re likely to rent to students, research what students want from their landlords, including the location which may be specific to certain streets or distance to key facilities and amenities
If possible, include a communal sitting/dining area as this will make the property more attractive to tenants – this could even be a kitchen that’s large enough to fit a table and chairs
Today’s tenants expect a high standard of accommodation and the property will be subject to heavy use, so invest in decent kitchen and bathroom fittings, and modern, hard-wearing décor and furnishings
Before works are finished, have a fire safety officer and an agent that regularly lets HMOs visit the property to make sure it is compliant and to advise you of any additional steps that should be taken
Think about outdoor areas – a decent low-maintenance patio or garden with somewhere to sit will help attract tenants, and aim to provide a shed or outbuilding where they can store bikes and other equipment
Don’t forget about the green credentials of your HMO – the Government is committed to upgrading private rented sector homes to an EPC rating of C, so it makes sense to get ahead and will help attract eco-friendly tenants, especially as you are likely to pay the utility bills.
If you convert your property into an HMO, your local authority will visit within five years to assess whether the property meets their safety requirements. If the property is licensable, they may visit before issuing the licence.
Being an HMO landlord is not for the faint hearted. It’s important to carry out your research – talk to other landlords on forums such as LandlordZONE, and join landlord organisations such as the NRLA, which runs a course on HMO licensing, to make sure you’re up to speed with the latest news and lettings legislation.
Speak to your local council to find out what is expected of HMO landlords in your area – the more educated you are, the less likely you are to fall foul of the law.
Most importantly, if you do decide to take the plunge and let out an HMO property, make sure you have the correct HMO insurance in place. This will help minimise the risks whilst also providing you with peace of mind that your investment is protected and you are following the correct rules on HMO insurance.
Our team are on hand to advise and can tailor your HMO insurance to your specific needs.
