What are the top tips for or investing in houses of multiple occupation?
These top tips can help you make a success of investing in HMOs
- Buy the right type of property Go for a cheap property with lots of rooms. Properties that owner occupiers might reject (no parking, no garden, ugly building) can prove ideal Houses of Multiple Occupation (HMOs) as they are cheaper and tenants may not be that put off by these things.
- Invest for the long term Getting an HMO up to scratch demands investment, often requiring new bathrooms and kitchens. The longer you can hold on to your property the greater the return on your investment is likely to be, so think 20 years rather than five.
- Keep investing regularly HMOs can generate more income than single lets, but you need to keep investing over the years to keep them up to standard to achieve the best possible returns.
- Create the maximum number of bedrooms Convert sitting and dining rooms into bedrooms to maximise your rent. The rules dictate that a bedroom needs natural light, an opening window and must be a minimum of 70 square feet.
- Don’t bother your Local Authority unnecessarily You don’t have to register with your Local Authority except where you have a Mandatory Licensable property which is a three or more storey building let to five or more tenants sharing a kitchen or bathroom.
- Do work with your Local Authority where necessary With three-storey licensable properties you have to apply for a license and pay a fee within three months of starting to let to five or more persons. Note you can’t license the property while it is occupied by only four people.
- Give your tenants what they want Provide locks on the bedroom doors, a fully furnished house, including a washing machine, central heating, TV and broadband.
- Offer all-inclusive rent It can make sense to include the cost of energy bills, water, TV, broadband and council tax in the rent – many HMO tenants seem to prefer this arrangement.
- Treat your tenants well Respond to complaints and arrange repairs quickly – preferably within 48 hours. Log all complaints and photograph with a date stamp camera as necessary for evidence.
- Keep the rent coming in It’s best to follow up arrears immediately, and don’t allow non-payment even once.