Advice on HMO/student let?

[98elise]

I have 3 BTL's which are all family houses in my area. i've just bought the third and its currenly being refurbished top to bottom. I've gone for these as they are easy to let, and I manage them.

I now have the chance to buy a 3 bed house just over the 100k mark a bit further away, which also needs a total refurb. It will rent out at £750 per month as a house, or as an HMO/student let, there are 4 rooms that can be let as bedrooms. 3 doubles, and one single. They would let at £70pw for the single, and £100pw for the doubles.

Does anyone have any advice for a potential HMO newbie?

[surfymark]

I have a couple of HMOs.

They are much more work to manage. Especially the student ones! You will have 4 times as many tenants which does seem to equal four times as much work. Plus you have four times as much turnover in tenants.

Also, you will need to be paying the bills yourself, which means your costs (and therefore your risk) increase.

I have just made one of my HMOs into a single let as it is so much less hassle. I would strongly recommend going the single-let route if you can.

HTH
M

[98elise]

surfymark said:

I have a couple of HMOs.

They are much more work to manage. Especially the student ones! You will have 4 times as many tenants which does seem to equal four times as much work. Plus you have four times as much turnover in tenants.

Also, you will need to be paying the bills yourself, which means your costs (and therefore your risk) increase.

I have just made one of my HMOs into a single let as it is so much less hassle. I would strongly recommend going the single-let route if you can.

HTH
M

Thanks. I'm happy with the extra hassle, as it means extra income. From what you are saying its not worth the hassle though?

Couple of other questions...

Does each tenant have a seperate AST, or is it less formal as they are renting a room?
Rooms are advertised by the week, is rent collected weekly or monthly?
Do you collect a deposit, and how is it held (ie do you have seperate DPS accounts for each person)?

[surfymark]

98elise said:

Thanks. I'm happy with the extra hassle, as it means extra income. From what you are saying its not worth the hassle though?

Couple of other questions...

Does each tenant have a seperate AST, or is it less formal as they are renting a room?
Rooms are advertised by the week, is rent collected weekly or monthly?
Do you collect a deposit, and how is it held (ie do you have seperate DPS accounts for each person)?

Well it is extra income, just saying that you do have to work for it. Plus there are more voids (as there are more tenants) so I am not sure it entirely is worth it. I have some good long-term tenants in one and the other I have would not work as anything else so am keeping those but I wouldn't buy another one myself.

For mine each tenant has a separate AST, pays a separate rent all-inclusive monthly by Standing Order.

The deposit is always 5 weeks rent (so slightly more than a month) and I use this company to protect it: http://www.mydeposits.co.uk/

Don't forget you will need an HMO Licence which is different for each council. Mine cost over £4k to get effectively (new fire alarm and fire doors etc etc) and took nearly two years of negotiating to sort out! It was a real pain!

HTH
M

[996c2]

surfymark said:

Don't forget you will need an HMO Licence which is different for each council. Mine cost over £4k to get effectively (new fire alarm and fire doors etc etc) and took nearly two years of negotiating to sort out! It was a real pain!

HTH
M

4 bedroom house doesn't sound big enough to be worthwhile converting to HMO.

Also, I thought HMOs were defined as 3+ floors and 5+ bedrooms?

[surfymark]

996c2 said:

surfymark said:

Don't forget you will need an HMO Licence which is different for each council. Mine cost over £4k to get effectively (new fire alarm and fire doors etc etc) and took nearly two years of negotiating to sort out! It was a real pain!

HTH
M

4 bedroom house doesn't sound big enough to be worthwhile converting to HMO.

Also, I thought HMOs were defined as 3+ floors and 5+ bedrooms?

Actually you are probably right (I missed the number of bedrooms). However it will depend upon your council. My Council wouldn't require a Licence as such but will require mandatory changes to the property otherwise they will shut it down (they threaten, not seen them do that yet).

The Mandatory changes are exactly equal to what you need to do to get a licence (fire doors, upgraded fire alarms etc) so you might as well assume you do need a licence unless told otherwise by the Council.

HTH
M

[Wings]

996c2 said:

4 bedroom house doesn't sound big enough to be worthwhile converting to HMO.

Also, I thought HMOs were defined as 3+ floors and 5+ bedrooms?

Correct a HMO is a property on 3 floors, with the same being subjected to a local authority planning application/permission.

I also believe with student,bed lets one must introduce the word "potential", it is potential to let for 5 tenants. I mention this because many HMO landlords i have spoken to, find that they only part let, 2, 3 or 4 tenants.

Whilst there is potential for a higher rental return, there is also considerable more work involved, tenants falling out, rent arrears, noise, lock outs, neighbour disputes, fights, parties etc. etc.

If the property did obtain planning permission for a HMO, then the person managing the property would also have to be licensed, with fire, health & safety inspections on a regular basis.

Under the Housing Act 2004, local councils now have far more say in the running of these types of properties, with talk that soon all bedrooms will have to have their own wash basins etc. etc.

Studio flat conversions i believe might be the OP's best way to go.