Should I convert my 3 flats to an HMO?

by Readers Question

10:45 AM, 22nd March 2016
About 3 years ago

Should I convert my 3 flats to an HMO?

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Should I convert my 3 flats to an HMO?

We have a property in Nottingham. It is currently 3 flats (one on each of the 3 storeys). Each flat contains 2 bedsits a shower room and a kitchenette. Each flat is connected to the central stairwell (and ground floor flat also has a dedicated entrance. what to do

I am currently refurbishing and making each room en suite. Should I keep the set up as it is or change the building to a 6 bed HMO (this would mean making the middle floor kitchenette into a bedroom and changing one of the ground floor bedrooms into a living room – but then there are no longer 2 bedsits on each floor.

I also have the option of putting on a conservatory/small extension as the living/dining area. If I did this option, I could maintain the building as either 3 flats as they are (i.e. 6 bedsits) but also have the option of giving all access to the communal living area.

Is it therefore an option to apply for change of use to joint C3/C4 (not even sure if Nottingham do this but other councils do) to give me ongoing flexibility to rent each room or flat individually or as a 6 bed HMO.

The property was previously used as a 6 bedsit ‘hostel’ but each flat is registered with planning as C3, but it may still get change of use despite article 4 because of this history.

This property will be let to students, who are council tax exempt (and actually the council tax is for the whole property anyway). My son will be owner/occupier but don’t think this will make much difference.

Any advice as to the best route to go?

Mike



Comments

Neil Patterson

10:47 AM, 22nd March 2016
About 3 years ago

Hi Mike,
Have you assessed how much rental income you could achieve in both configurations and what the costs would be?

Mike G

11:36 AM, 22nd March 2016
About 3 years ago

Reply to the comment left by "Neil Patterson" at "22/03/2016 - 10:47":

At the moment rental would be pretty much the same in either configuration as it would still be 6 individually let rooms. To go down the HMO route I would not need to extend as one bedroom becomes a living area and a kitchen becomes a bedroom (STPP). However, by leaving it as 3 flats I would need to refurbish 3 small kitchens rather than one and put on the extension and due to space I would not be able to have a living/dining area within each flat. Other considerations are the licensing fees as I will probably need a 257 licence(£910) as well as an HMO license (£980)

Rod Adams

11:55 AM, 22nd March 2016
About 3 years ago

If the rental income will be the same either way, there would seem to be no point incurring the additional expenditure of an HMO. Unless there is some other compelling reason?

Regards,

Rod.

Mike G

12:00 PM, 22nd March 2016
About 3 years ago

Reply to the comment left by "Rod Adams" at "22/03/2016 - 11:55":

I think I will still need a licence for the entire property anyway plus the other costs of creating a living area and the kitchens.


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