Roger Morris - Director of Sales
It’s no wonder HMOs are becoming so popular with landlords keen to diversify their portfolios. The potential to earn higher rental yields and the peace of mind that comes with knowing that if one tenant moves out you won’t fall behind with mortgage payments has proved attractive to serious investors in recent years.
A property is classified as an HMO if at least three people live there, form more than one household and share toilet, bathroom and kitchen facilities with the other tenants. Two new pieces of legislation which are due to come into force on 1st October will affect thousands of HMO landlords* and could result in big fines for those who don’t comply with them.
- Licensing - HMOs in England occupied by five or more people forming more than one household and sharing toilet, bathroom and kitchen facilities will need to be licensed, regardless of the number of storeys. At present, only properties with three or more storeys need to be licensed. Landlords failing to apply for a licence when one is required could face a fine of up to £20,000, plus costs.
- Minimum bedroom size - There are now minimum room size requirements that need to be met. It will also be a mandatory condition that any room of less than 4.64m2 may not be used as sleeping accommodation. The landlord will need to notify the local housing authority of any room in the HMO with a floor area of less than 4.64m2. Further room size requirements need to be met depending on the residents. The new rule applies to all landlords seeking a new licence. Landlords of existing HMOs will have up to 18 months to make necessary changes before applying for a new licence. Landlords failing to comply with the new rule could face a fine of up to £30,000. For full details, click here.
As a leading specialist lender, we understand HMO landlords and their needs. To find out more about our HMO and Limited Company Buy to Let Mortgages, click here. If you’d like to speak with someone, click here to contact your Business Development Manager.
Our BDMs regularly speak at roadshows and round table events around the country. Keep an eye out for upcoming events.