Convert to HMO or not?

Convert to HMO or not?

13:26 PM, 2nd February 2021, About 3 years ago 22

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I have a reasonably good-sized mid-terrace property coming vacant. In the past, I let this to families.

The ground floor of the house has a large front room, large mid-room and a large kitchen. Upstairs there are two medium-sized bedrooms, good-sized box room (8ft x 6ft) and bathroom, there is also a loft room with a window which in the past has been used as a bedroom.

I am wondering whether to convert this house into an HMO with a room in the front room, Mid-room and kitchen as communal areas and two or three rooms upstairs. If I decide to go ahead, would I need to inform my lender?

Any thought or comments would be appreciated.


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Paul Shears

21:26 PM, 2nd February 2021, About 3 years ago

Do you think anyone should live like this?
Would you want to yourself?
Would you want anyone that you care about to live like this?
This is obviously not the only option for future social structure, but it is certainly one of the worst.
I have seen the effects of this in an area of the country where we, supposedly, had one of the highest qualities of life in the UK.
It has been an utter social disaster for all concerned except, debatably, the local council bureaucrats and the investors who never have to suffer the consequences.

Reluctant Landlord

9:14 AM, 3rd February 2021, About 3 years ago

To be totally honest we had a huge house that has been used as an HMO (licence exempt due to it being a charity) and it worked well for years. Now the Charity have given notice it has been really really difficult to find a similar organisation to take it on. It is fully compliant with everything needed, had the Council come and assess for HSS and every cert in place.

The issue is I do not want to run it as an HMO (with a licence) myself and I can't find another company/provider that seems trustworthy enough that I want to let it to. They all seem to be in this Rent2Rent sphere - which is a minefield and where there really is no legal clarity. None of their 'contracts' are comprehensive enough, seem woolly as to what LL and they are responsible for, and like others have mentioned before, many have not been established very long. Companies house show them to be Ltd companies with very little financial history, a high turnover of directorships etc and basically no real assets of their own.
Worse still they offer ;licences' to tenants, not AST's so - yep if they do a bunk, you are left sorting out 5 or 6 individual tenants . I balked on the risk of this alone, even moreso when you think the impact of Covid and how anything legal is going to take forever to get sorted.
I have sold the house, and intend on buying smaller houses that we can have families in and directly manage. I forsee (unfortunately) a lot of families coming onto the housing ladder that have either been long term (good) tenants elsewhere who are having to financially reduce their rent outgoings or who will be coming into rented from ownership via repossession. Time to give those who really need a hand a help out. I am finding it very tiring dealing with tenants who the state have washed their hands off, yet expect me to assist while at the same time as giving me short thrift when I ask for a basic bit of protection.

Dr Rosalind Beck

10:56 AM, 3rd February 2021, About 3 years ago

Reply to the comment left by Paul Shears at 02/02/2021 - 21:26
What do you have against HMOs? They are fantastic for many people and with low rents including bills are a great way for single people especially to save a deposit for their own home.
From the landlord's perspective, they can be hard work however, and there are lots of costs involved - eg if bills are included, this can be abused by the tenants and cost a fortune. On the whole though, I would say HMOs can give the landlord a better profit and be great for many who otherwise couldn't afford to live anywhere and also perhaps wouldn't want to live on their own.

LordOf TheManor

10:59 AM, 3rd February 2021, About 3 years ago

Convert to an HMO??? This is the quickest way to trash your investment. Forget about any capital growth..... and bring the community down, too, while you're at it.

Are you mad, careless or just plain greedy?

Dr Rosalind Beck

11:02 AM, 3rd February 2021, About 3 years ago

Hi Mike
I'm sorry some people here are being aggressive. You have asked a perfectly reasonable question and I hope some more helpful responses will arrive here soon, which don't have an accusatory tone - as though you are considering doing something awful by providing much needed housing.

Ian Narbeth

11:08 AM, 3rd February 2021, About 3 years ago

I am an HMO investor. Unless you are willing to spend a substantial sum to upgrade your property and either learn the rules or employ an agent who will take 10% + VAT = 12% or more then forget it. I would need to see the rooms but the 8x6 will not be allowed as a bedroom and the loft room may not either depending on size measured where height is minimum 1.5 metres and how easy fire escape is. You will have to install a fire alarm system and probably upgrade the electrics and RCB panel.
You will need to install fire doors if they are not there already and thumb turn locks.
It is not great that there is only one bathroom so if you can you should create at least one ensuite shower room if there is space and if the plumbing works.
Yes you will absolutely have to tell your lender and probably re-finance with them or someone else as standard BTL mortgages do not allow HMOs. You will also need specialist insurance. You will need to get an HMO licence from the Local Authority (check first that there isn't an Article 4 direction) removing the right to convert to an HMO in your area). If they want additional works done you will have to do them so at the very least you need to speak to the Council.
There is a lot else to think about and comply with. Please don't think changing to an HMO is an easy matter.

Ian Narbeth

11:13 AM, 3rd February 2021, About 3 years ago

Reply to the comment left by LordOf TheManor at 03/02/2021 - 10:59
Sorry, but you don't know what you are talking about. I have been an HMO investor for 8 years and know dozens of other HMO investors. None of the things you mention is correct.

Reluctant Landlord

11:15 AM, 3rd February 2021, About 3 years ago

Mike - I certainly didn't suggest the HMO route is NOT a route to take - just in my experience it seems fraught with a lot more pitfalls /work and risk than I for one feel comfortable with. I agree that HMO's serve a purpose, and I would like to think it is for the benefit of the tenant to give them a step up etc AND the person who runs the HMO runs it well. This clearly was the reasoning behind the idea of their establishment in the first place. Clearly over time, all manor of issues have come to light regarding these and it does seem that for an owner/LL perspective there is a propensity to lay this all in your lap, and the way that licencing is going with no doubt all manner of legislation (and fines) to follow, its not a game I want to play. Good Luck if you decide to take a leap!

david porter

11:16 AM, 3rd February 2021, About 3 years ago

In the current Emergency I would consider renovating the property back to a single family dwelling.
I have done this previously and made a signifant gains even after substantial remedial works.

david porter

11:20 AM, 3rd February 2021, About 3 years ago

Reply to the comment left by Ian Narbeth at 03/02/2021 - 11:13
Please bear in mind that we are in the middle of a National Emergency. Todays advice is that living in close proximity to others is less desirable than not so long ago.

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