Thinking of investing in a House of Multiple Occupancy (HMO)? It can be quite a bit of hard work initially and does need a lot of time investment if you're planning to do the management of the property yourself. However, the returns can be phenomenal when compared to investing in a buy-to-let. And, if a report published this month is anything to go by, as the owner of an HMO you shouldn't have to worry too much about attracting tenants in future - especially young professionals,
How so? Well, it's because rooms in HMOs are becoming the accommodation of choice for this growing sector of the population. Certainly, it's what the data in the report - commissioned by one of the UK;s leading student property investment companies - shows.
The title of this blog post may be a bit of a misnomer. That's because it's not the annual testing of landlords, of course, but rather the tests landlords of HMOs should be carrying out on an annual basis to ensure their properties are habitable for tenants. Indeed some of these tests are statutory and if not carried out could lead to a fine and removal of the HMO licence. Others may be non-mandatory but they’re still advisable - for your own peace of mind as well as that of the tenants.
When it comes to interior design very few of us are experts. We all know what we like though – and thankfully our tastes tend to be very different otherwise it’d be a bit of a dull world interiors-wise.
However, when it comes to designing or planning a room in terms of colours, fabrics, furniture etc there are a few rules to stick to ensure that it doesn’t look as if it’s been designed by a three year old.
Before I go on though do remember the golden rule about letting out a property – it shouldn’t be your taste but rather be ‘tastefully’ decorated. So anyhow, what are those interior design rules? Well, read on…
Whether or not to sign up with the National Landlord’s Association (NLA) is a question every landlord and potential property investor asks themselves at some point. You’re probably already a member of several associations as it is and the last thing any of us wants is to get more unsolicited mail landing in our inbox or on the door mat.
Last week in the Property Go-To Girl blog we discussed what was involved in applying for and getting an HMO license. This week we're looking at a different piece of legislation which could relate to HMOs - an Article 4 Direction.
What is an Article 4 Direction?
This piece of legislation was introduced towards the end of 2010 in essence to allow local authorities to 'protect the character of a Conservation Area or the visual amenities of other areas'. In terms of HMOs it means restricting the number of shared housing in a particular locale (presumably to cut back on the number of students or young people living there and encourage families instead in an effort to cut back on perceived social housing difficulties). Some local authorities allow only 10 per cent of housing in a particular area to be classed as HMOs.
Considering buy-to-let mortgages can be quite a bit more expensive than your typical residential mortgage it’s tempting, when renting out your former home, not to tell your mortgage company what you’re about to do and just stick with the cheaper percentage interest instead.
But it’s not wise.
The more rooms you have rented out then the more money you’ll receive at the end of the day. It’s simple arithmetic. Therefore, doesn’t it make sense to try and let as many rooms as you can in order to make as quick a profit as possible?
The short answer to the question “Do I need an agent to rent out my property?” is “No.” There is no legal requirement to advertise or supervise the renting of your HMO in Oxford via a third person. But often it’s so much easier to do so. That’s because there is a lot more to think about when it comes to being a landlord than simply the legal implications.
As a landlord with an HMO the topic of whether or not you should rent your rooms to tenants on housing benefit will undoubtedly rear its ugly head at some point. Why ugly? Well, it’s always a sore point. No-one wants to be deliberately discriminatory – especially to those who are may be a bit down on their luck. But, on the other hand, this is business and you need to make sure you’re getting the rent on a regular basis.
That’s not to say you won’t with housing benefit tenants but the bottom line is that when tenants are on benefit and in receipt of Local Housing Allowance (LHA) there’s obviously not a lot of money to go round. And this is when the potential for unpaid rent is most likely to arise.
Unlike when it comes to other ‘normal’ buy to let properties, owners of HMOs aren’t tempted to decorate them as if they were their own home. That’s because just the sheer size of an HMO (three to four bedrooms minimum as a rule) and the fact it doesn’t resemble a family home because there’s often no shared sitting room, reminds landlords that this is indeed a business opportunity and should be regarded as such.
That means buying furniture which is decent enough so that it’s not going to collapse the first time anyone over 14 stone perches on it, but that’s not so designer-ish that you’re going to be in tears when, the first time you round come to collect the rent, there’s a huge coffee stain on the pretty pink fabric cushions (in the event your HMO does have a sitting room).
I'm Jacquie the Property Go-To Girl. I am passionate about property. I love to help people make the most out of their property investments!