HMO Conversions: The Landlord’s Introduction

HMO stands for House in Multiple Occupancy and just as the name suggests, HMOs are houses, apartments, and other residential structures shared by multiple occupants. While there are several clauses of HMOs that remain open to interpretation, the definitive standards reading what can be defined as an HMO are well established.

An HMO is a single piece of rental property which is shared by multiple, unrelated tenants. The occupants must have at least one or more shared bathroom and kitchen between them. Note that three friends living in a house and sharing rent would also qualify the house as an HMO property, if the friends do not have familial or spousal ties between any of them.

What kind of Buildings are Ideal for HMO Conversions?

Houses and apartments are the most obvious and straightforward options for landlords looking to convert them into HMOs. They would need the least number of modifications because residential properties are generally built to house multiple people, irrespective of whether they are related or not. Depending on the property’s condition and architecture, renovations and minor changes will still be necessary though.

Can Non-Residential Buildings be Converted into HMOs?

This is where it gets interesting for landlords because they can theoretically turn almost any suitably sized non-residential building into an HMO. This includes abandoned police stations, medical clinics, small markets, or even old retail stores. Renovating and converting old properties into HMOs will need the expertise of an experienced and dedicated HMO Architect first, but it’s almost always possible. However, when you find a good deal on old real estate, do consult with your HMO architects first to be sure that the cost of conversion would be worth it.

Should Landlords Invest in HMOs?

Developers are already investing heavily in converting old buildings and building new HMOs from the ground up. The cost of rent is high in any major city and few people can afford to pay the rent alone. This is not just true for students either, although they are the prime occupants in HMOs. More recently, landlords have realised that people living with roommates in a single residential property has become the norm for students and even young couples in some locations. This is due to the price of rent increasing exponentially in major metropolitans.

In fact, landlords are often hard pressed to find enough tenants to fill houses and apartments in prime locations, if they choose not to allow multiple occupancy. On the other hand, landlords who allow multiple occupancies find it much easier to fill their rental properties and generate a much steadier cashflow.

In recognition of the practical conditions, smarter landlords are not only allowing multiple occupancy, but they are also remodelling and constructing housing properties to meet the standards set for houses in multiple occupancy. HMOs are seldom rented by the same parties for a very long period of time. However, that’s never an issue but a practical advantage. It simply opens up more opportunities for renegotiating the rental terms with the new tenants.