Many landlords are turning to HMO properties nowadays in order to maximize their return on their buy to let investments.
The reason is that many bog standard semi-detached properties you can turn into a 5 bed HMO with minimal fuss. This therefore means that instead of getting just one rental for the property you get 5 !!!
So how are these HMO properties kitted out. Well this is where landlords must abide by council regulations. Every council will have its own stipulation as to what you need to meet the HMO criteria, after this is met you will then be given an HMO license in order for you to operate.
HMO’s require a license so that councils can control and keep an eye on standards.
They make sure that the building:
• is safe
• In good repair
• smoke detectors are in place and that there are enough
• has appropriate fire exits
• has enough sinks, cookers, baths and toilets for the tenants.
• electrics and electric heaters are all certificated
Many landlords have far more rooms to let than just five. We have some properties insured with us in central London where they have 32 rooms inside. So you can probably imagine how much the cost for a license differs. The minimal amount you will pay for an HMO license is £300.00 and the maximum is around £4000.00.
Insuring an HMO Property is not a problem for specialist brokers like ourselves and the risks are usually good, due to the regulations that the councils enforce. HMO insurance is quite commonly a risk where there are DSS tenant types or a case where we have to insure tenants on benefits. If the tenancy agreement is between the tenant and the landlord then no problem, but insurers can get fussy when the tenancy agreement is between the council and the tenant. This is mainly due to the fact that the landlord has no control and does not know what is going on inside their properties. Again we facilitate this but premium may be slightly higher.
