Multiple occupancy rental

[EarlOfHazard]

Hi all,
I have the opportunity to buy a three bedroom property down south, in my hometown. This isn't to live in ( I work in London through the week).
I'm thinking of renting out the rooms individually as I believe that this'll suit the demigraph more.
I presume that I would I need a buy to let mortgage?
And are there any pitfalls that I should look out for when considering this approach?

Cheers

[Saleen836]

You wil also need a HMO (home of multiple occupency) licence from the local council

[cerberaperv]

I own HMOs in Liverpool. Best advice I can give is take a look at the competing HMOs in the area, then make yours miles better.
You will get a better class of tenant and a higher occupancy rate.

Then make sure you reference the applicants thoroughly and make sure they have guarantors.

Depending where you buy, the council may have a licensing criteria which you will have to apply and adhere to, but licence or not, it’s good practice to install mains wired fire/smoke detectors with a grade A, LD2 panel and FD30 doors and frames.

[dazwalsh]

cerberaperv said:

I own HMOs in Liverpool. Best advice I can give is take a look at the competing HMOs in the area, then make yours miles better.
You will get a better class of tenant and a higher occupancy rate.

Then make sure you reference the applicants thoroughly and make sure they have guarantors.

Depending where you buy, the council may have a licensing criteria which you will have to apply and adhere to, but licence or not, it’s good practice to install mains wired fire/smoke detectors with a grade A, LD2 panel and FD30 doors and frames.

This ^ dont underestimate the work required running a HMO, the fire safety requirements are quite extensive, the tenant turnaround is higher than a standard house and make sure you vet your tenants carefully to avoid upsetting the other tenants. Dont accept anybody who isnt in stable work.

[BoRED S2upid]

cerberaperv said:

I own HMOs in Liverpool. Best advice I can give is take a look at the competing HMOs in the area, then make yours miles better.
You will get a better class of tenant and a higher occupancy rate.

Then make sure you reference the applicants thoroughly and make sure they have guarantors.

Depending where you buy, the council may have a licensing criteria which you will have to apply and adhere to, but licence or not, it’s good practice to install mains wired fire/smoke detectors with a grade A, LD2 panel and FD30 doors and frames.

Good practice? I thought it was law to have fire doors hard wired fire / smoke detectors? Or is that just in Wales.

[EarlOfHazard]

Thanks for your replies all.

[NicoG]

Saleen836 said:

You wil also need a HMO (home of multiple occupency) licence from the local council

The OP mentions a 3-bed house, which, as I understand it, would not invoke the HMO rules based on either 4+ rooms on 3+ floors, or, 5+ rooms on 2+ floors.

It sounds more like a "multi-let" which is a different deal altogether.

OP - be aware that councils have quite some license to make up the rules as they see fit in their respective different areas.
Research the applicable rules in your area on the relevant Council's website - In my experience they are comprehensively and sensibly set-out and it's easy to do....

All that said - from a human point of view, adopting the HMO standards of fire safety (mains wired alarms, fire doors with closers etc) even where NOT legally obligated to do so, is a good idea.

Mortgage wise, well it's up to you whether you're inclined to get a residential and "have some lodgers" or go for a BTL, but be aware that most BTL mortgage provider specifically stipulate that the property must be let to one household on an AST, and ergo, specifically rule out HMO / multi-let type occupancy...

If you have the financial firepower to take on an additional residential mortgage, this would be much cheaper (in terms of interest) than would be a commercial / HMO-ready mortgage product.

You should also consider the insurance aspects - if you misrepresent to an insurance Co and the worst happens, you are proper fked.

HTH - Nick.

Whereabouts is the place you're looking at OP ?

[Saleen836]

NicoG said:

Saleen836 said:

You wil also need a HMO (home of multiple occupency) licence from the local council

The OP mentions a 3-bed house, which, as I understand it, would not invoke the HMO rules based on either 4+ rooms on 3+ floors, or, 5+ rooms on 2+ floors.

It sounds more like a "multi-let" which is a different deal altogether.

OP - be aware that councils have quite some license to make up the rules as they see fit in their respective different areas.
Research the applicable rules in your area on the relevant Council's website - In my experience they are comprehensively and sensibly set-out and it's easy to do....

All that said - from a human point of view, adopting the HMO standards of fire safety (mains wired alarms, fire doors with closers etc) even where NOT legally obligated to do so, is a good idea.

Mortgage wise, well it's up to you whether you're inclined to get a residential and "have some lodgers" or go for a BTL, but be aware that most BTL mortgage provider specifically stipulate that the property must be let to one household on an AST, and ergo, specifically rule out HMO / multi-let type occupancy...

If you have the financial firepower to take on an additional residential mortgage, this would be much cheaper (in terms of interest) than would be a commercial / HMO-ready mortgage product.

You should also consider the insurance aspects - if you misrepresent to an insurance Co and the worst happens, you are proper fked.

HTH - Nick.

Whereabouts is the place you're looking at OP ?

From the Gov.UK website.....
Your home is a house in multiple occupation (HMO) if both of the following apply:

at least 3 tenants live there, forming more than 1 household
you share toilet, bathroom or kitchen facilities with other tenants

Your home is a large HMO if both of the following apply:

at least 5 tenants live there, forming more than 1 household
you share toilet, bathroom or kitchen facilities with other tenants

A household is either a single person or members of the same family who live together. A family includes people who are:

married or living together - including people in same-sex relationships
relatives or half-relatives, for example grandparents, aunts, uncles, siblings
step-parents and step-children

Edited by Saleen836 on Friday 9th November 11:04

[NicoG]

Saleen836 said:

From the Gov.UK website.....
[b]Your home is a house in multiple occupation (HMO) if both of the following apply:

at least 3 tenants live there, forming more than 1 household
you share toilet, bathroom or kitchen facilities with other tenants

Your home is a large HMO if both of the following apply:

at least 5 tenants live there, forming more than 1 household
you share toilet, bathroom or kitchen facilities with other tenants

A household is either a single person or members of the same family who live together. A family includes people who are:

married or living together - including people in same-sex relationships
relatives or half-relatives, for example grandparents, aunts, uncles, siblings
step-parents and step-children[/b]

I stand corrected, though I think that's changed recently - there definitely used to be a consideration around number of floors and occupants...

With 3 people now qualifying as needing an HMO licence, I wonder if that's why so many (used to be) multi-lets (that are now HMOs) are coming onto the market in my area...