To go HMO on our own or not to go?

by Readers Question

2 months ago

To go HMO on our own or not to go?

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To go HMO on our own or not to go?

Dear all,

We are currently renting our 3 bedroom/2 bathroom flat, through an Agency in Bristol, to two unmarried couples. We pay 13,5% fee for the full management of the flat.

Initially, when our flat was put on the market and rented out by this Agency there was no mention of it being regarded as an HMO. Six months ago the Agency wanted us to sign some papers and have some costly HMO checks performed on the flat. Our flat is not an HMO from what I understand by reading various regulations!

The AST contract is coming up to an end in April and we would like to say goodbye to the agent and manage our flat and our very good tenants without anybody’s help. Currently this is our only source of income (both made redundant). The Agency claims that we are obliged to pay £250 penalty fee at the end of the contract if we wish to keep the same tenants. Why do we need to do this if our tenants wish to continue living in the flat and we have no objection?

Can anybody advise how do we proceed with managing our flat without anybody’s help, i.e. drafting up a new AST, preparing an inventory list, performing all electrical checks if necessary?

Many thanks and best wishes to all.
Alex



Comments

Pete Lightowler

2 months ago

Hi Alex
The agent is quoting that fee to end the contract cause that's probably what the contract says. Check it to confirm. If it does then pay it IF and only IF you're prepared to put in all the hours it takes to manage an HMO.
My advice would be for newish landlords definitely NO!!!!
It's twice the profit but ten times the work. Not only that, you need to be up to speed with all the rules and regs which apply.
You need at least 2 years hands on full management experience of family lets before considering an HMO.

Robert Mellors

2 months ago

Hi Alex

I'm not sure why you think this is not a HMO (3 or more residents in 2 or more households). It may not be a HMO that requires a HMO Licence, but it would still be a HMO and as such it is subject to a whole raft of legislation that would not apply to a single household letting.

I agree with Pete Lightowler, if you are inexperienced in managing tenancies then you should stay well clear of trying to manage a HMO.

Michael Barnes

2 months ago

Sounds to me like your agent let the property as a HMO without consulting/advising you, and you should therefore ask them to finance the necessary actions to make it lawful/legal.

Mike

2 months ago

Alex, if the two couple you rent to are in any way related to each other, you need not worry as they would be considered as a single family unit, if assuming they happen to be related as cousins or even half cousins, uncle, aunt, mother in law, etc etc etc. it is considered as a single family unit.
If they are unrelated couple, you may need a small HMO license, in which case there are a few requirements that you should ask your local council what they require or better still ask your agent whilst he is still acting for you.
Some of the requirements that i know of are :
1. Fire door in Kitchen
2. linked Heat Alarm in Kitchen
3. linked Smoke alarm in all common areas, i.e. Dinning room, corridor, upper hall, etc
4. Fire extinguisher near stairs and possibly one near kitchen
5. Fire blanket in Kitchen
In small HMOs it is not a requirement to fit smoke alarms in bedroom, but that may be requirement by your Council.
6.Means of escape through opening windows if upstairs,
7. You may have to pay Council tax and utility bills charge it through rent, so there is an element of abuse by tenants and they tend to think because they pay energy bills through rent they can do what they like with heating and taking long showers.
8. In some HMOs bedrooms may need to have fire doors as well.

Keeping a family is your best bet, but you never know the two couple might even be related, who knows if they check their family tree they might turn out to be relatives.
If they are not, then its an HMO.
Another way out of this is if you rent your house to one couple and then give them permission to bring in a lodger, I think you are allowed up to 2 lodgers but I may be wrong on this, however you are definitely allowed one lodger before it becomes an HMO. If I am wrong I can be corrected. thanks

Michael Barnes

2 months ago

Reply to the comment left by Mike at 12/03/2018 - 17:51
It is unlikely that 4 unmarried people will all be related for the purposes of the legislation.

Point 7 probably only applies if rooms are let individually on separate agreements. If there is one agreement for the entire property identifying all the individuals as tenants, then there should be no problems.

Graham Bowcock

2 months ago

Dear Alex

Picking up the themes of others, it is not for the wary to self-manage HMO's. If you are asking a forum such as this for advice then you may well need an agent to steer you through the minefields.

For a start, you may not need a new AST just because you change agent; the agreement should be between you and the tenant and you cannot force a new agreement on the tenant. The existing AST ought to suffice. I would also hope that your agent has already done an inventory and electrical check.

If you are intent on changing agent my advice is to sit down with the existing agent and secure all the relevant documents from them. They are obliged to provide them to you.

As for the fee, check your agency contract to see if this is due. If it is then pay it.

Graham

Ian Narbeth

2 months ago

Reply to the comment left by Michael Barnes at 12/03/2018 - 17:03Be careful what you wish for! The agents' terms may say that they can deduct the cost of complying with legislation from the rent.
Alex, unless you know what you are doing you can get into serious trouble very easily. If your flat is in a block of three or more storeys, it may be licensable. Were you aware of that and that it is an offence not to be licensed? Were you also aware that if you have a licensable HMO and do not have a licence your tenants can require you to repay the last 12 months' rent? That's just for starters. Do you know the rules about protecting deposits? About fire doors and the need for fire alarms and the weekly checks that may be required.? I could go on. You can try managing it yourself. We do and it is a profitable business but if you don't know what you are doing you can end up out of pocket and disillusioned. If you want to do it yourself I suggest you join a landlord's organisation such as the NLA or RLA. However, if you only have one property I would employ a competent agent and not spend 10-15 hours a month dealing with your business.


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