A House in Multiple Occupation (HMO) is a property let to five or more people who are not from one household, where some or all of the facilities, such as bathrooms and kitchens, are shared. HMOs are a common form of accommodation in the UK, they are particularly popular with investors and developers due to their higher total rental yield.
Despite the presence of over 4,000 HMOs (Houses in Multiple Occupation) in Portsmouth, over 10,000 in Southampton, and plenty more in Bournemouth – there is a constant cycle of new projects replacing old ones. This has highlighted a persistent in the south cost housing market, there is opportunity right on our doorsteps.
HMOs are bridging the housing gap and providing a brighter future for Portsmouth, Southampton and Bournemouth. Three vibrant coastal cities, are home to a dynamic mix of residents, from students and young professionals to established families and retirees. While the abundance of HMOs (Houses in Multiple Occupation) has provided much-needed affordable housing, it has also raised concerns about living standards and neighborhood diversity.
However, a closer look reveals a positive transformation unfolding. HMOs are not merely providing temporary lodgings; they are becoming catalysts for community vibrancy and cultural exchange. The influx of young people, often from diverse backgrounds, infuses neighborhoods with a youthful energy and introduces a fresh perspective to local businesses and cultural institutions.
This influx of new residents has also spurred revitalization efforts, with many HMOs undergoing renovations and upgrades to meet the demands of modern living. The increased demand for high-quality HMOs is driving a wave of innovation in design and amenities, ensuring that these living spaces are comfortable, accessible, and conducive to a sense of community.
As HMOs continue to evolve, they are becoming more than just places to live; they are hubs of activity, fostering connections and fostering a sense of belonging among residents. Community gardens, shared workspaces, and organized social events are becoming increasingly common in HMOs, creating a vibrant tapestry of shared experiences.
The future of housing in Portsmouth and Southampton is not about simply adding more HMOs; it’s about transforming them into places that enhance the lives of residents and enrich the communities they call home. By prioritising quality and fostering a sense of community, HMOs can play a pivotal role in shaping a brighter future for these dynamic cities.
In the ever-changing world of real estate, landlords are constantly seeking out new and lucrative investment opportunities. Houses in Multiple Occupation (HMOs) have emerged as a popular choice for savvy investors, offering the potential for high rental yields and strong capital appreciation.
What are HMOs?
HMOs are properties that are rented out to five or more tenants who are not from the same household. This means that tenants will share common facilities such as kitchens, bathrooms, and living areas. HMOs are a common form of accommodation in urban areas, particularly among students, young professionals, and low-income earners.
Why invest in HMOs?
There are several reasons why HMOs are an attractive investment option for landlords:
High rental yields: HMOs can generate higher rental yields than traditional buy-to-let properties due to the increased number of tenants. This is because landlords can charge rent per room rather than per property.
Strong capital appreciation: HMOs are often located in areas with a high demand for rental accommodation, such as city centers and university towns. This can lead to strong capital appreciation over time.
Diversification of your portfolio: Investing in HMOs can help to diversify your property portfolio and reduce your overall risk. This is because HMOs are less sensitive to changes in the wider property market.
Risks to consider
Despite the potential benefits, there are also some risks associated with investing in HMOs:
Higher vacancy rates: HMOs are more likely to have higher vacancy rates than traditional buy-to-let properties. This is because tenants may be more likely to move frequently.
Higher maintenance costs: HMOs are more likely to incur higher maintenance costs than traditional buy-to-let properties, due to the increased wear and tear from multiple tenants.
Potential for tenant disputes: HMOs are more likely to have tenant disputes, as tenants may share facilities and have different lifestyles.
Regulation risk: HMOs are subject to a number of regulations, which can change over time. Landlords need to be aware of these regulations and ensure that their properties comply.
Tips for successful HMO investing
If you are considering investing in HMOs, here are a few tips for success:
Do your research: Before you invest in any HMO, it is important to do your research and understand the risks involved. This includes understanding the local rental market, the type of tenants you are targeting, and the regulations that apply to HMOs in your area.
Choose the right property: Not all properties are suitable for HMOs. The property should be in good condition and have the necessary facilities, such as multiple bedrooms, bathrooms, and kitchens.
Obtain the necessary licenses: In most areas, you will need to obtain a license to operate an HMO. Make sure you comply with all licensing requirements.
Find the right tenants: It is important to find reliable and responsible tenants for your HMO. This will help to reduce the risk of tenant disputes and ensure that your property is well-maintained.
Manage your property effectively: Managing an HMO can be time-consuming, so you may want to consider hiring a property management company to help you with this.
Overall, HMOs can be a sound investment for landlords who are willing to put in the time and effort to manage them effectively. By understanding the risks and taking the necessary steps, you can maximize your chances of success and enjoy the benefits of a lucrative investment.
There are different types of HMOs, including:
- Purpose-built HMOs: These properties are designed to be HMOs from the outset and have been constructed with shared facilities in mind.
- Converted HMOs: These properties were originally designed as family homes but have been converted into HMOs.
- Houses of multiple occupancy: This is a term used in England and Wales for properties that are occupied by three or more unrelated tenants who share facilities.
HMOs can provide affordable accommodation for people on low incomes, such as students, young professionals, and people who have recently arrived in the UK.
There are a number of regulations that govern HMOs. These regulations are designed to ensure that HMOs are safe, habitable, and managed properly.
In England and Wales, you will need a license to operate an HMO if your property is occupied by five or more people who form two or more households and share toilet and kitchen facilities. There are a few exceptions to this rule, so you should check with your local council to see if you need a license.
The requirements for an HMO license will vary depending on your local council. However, they will typically include:
- The property must be in a good state of repair and free from hazards.
- The property must have adequate fire safety measures in place.
- The property must have enough space for the number of tenants.
- The landlord must have adequate management experience.
As an HMO landlord, you have a number of responsibilities, including:
- Ensuring that your property is safe and habitable.
- Maintaining your property in a good state of repair.
- Complying with all HMO regulations.
- Providing your tenants with a written tenancy agreement.
- Dealing with tenant complaints promptly and fairly.
The cost of an HMO license will vary depending on your local council. However, it is typically between £500 and £1,000 per year.
HMOs can be a good investment for landlords due to the following reasons:
- Higher rental yields: HMOs can generate higher rental yields than traditional buy-to-let properties due to the increased number of tenants.
- Strong capital appreciation: HMOs are often located in areas with a high demand for rental accommodation, such as city centers and university towns. This can lead to strong capital appreciation over time.
Despite the potential benefits, there are also some risks associated with investing in HMOs:
- Higher vacancy rates: HMOs are more likely to have higher vacancy rates than traditional buy-to-let properties. This is because tenants may be more likely to move frequently.
- Higher maintenance costs: HMOs are more likely to incur higher maintenance costs than traditional buy-to-let properties, due to the increased wear and tear from multiple tenants.
- Potential for tenant disputes: HMOs are more likely to have tenant disputes, as tenants may share facilities and have different lifestyles.
- Regulation risk: HMOs are subject to a number of regulations, which can change over time.Landlords need to be aware of these regulations and ensure that their properties comply.
There are a number of resources available to help you learn more about HMOs, including:
- Your local council
- The National Landlords Association (NLA)
- The Residential Landlords Association (RLA)
A large HMO is a property that is occupied by seven or more people who form two or more households and share toilet and kitchen facilities. A small HMO is a property that is occupied by five or six people who form two or more households and share toilet and kitchen facilities.
The fire safety requirements for HMOs will vary depending on your local council. However, they will typically include:
- The property must have a fire alarm system that is tested regularly.
- The property must have a fire escape plan.
- The property must have adequate means of escape in case of fire.
The tenancy deposit rules for HMOs are the same as the rules for traditional buy-to-let properties. This means that you must protect your tenants’ deposit in a government-approved deposit protection scheme.
The eviction procedures for HMOs are the same as the procedures for traditional buy-to-let properties. This means that you must follow a strict legal process to evict a tenant.
The energy efficiency requirements for HMOs are the same as the requirements for traditional buy-to-let properties. This means that you must have an Energy Performance Certificate (EPC) for your property.