10:05 AM, 20th October 2014, About 9 years ago 3
I own a 2 bed end of terrace house in south-east London, which in my opinion is ripe to convert into a HMO. The property currently achieves a gross rental yield ~7% with a single dwelling occupier but having spent a great deal of time researching local demand I think with a substantial investment (loft/side extensions/additional bathrooms) I could convert (with the necessary planning permission) this property into a 5 bedroom HMO which would achieve a (blue sky) gross yield in the region of ~12-14%
My question/concern relates to ‘council HMO risk,’ I am extremely fearful of making a substantial capital outlay, work closely with the council to obtain all the necessary certifications and then subsequently for the local council to change their HMO requirements. I have read some real horror stories/predictions that HMO’s that were previously licensed, suddenly failing because a local council amended a minimum room size sq footage or applied more stringent rules to the number of inhabitants that could share bathroom/kitchen facilities. Other horror stories include local councils looking at applying council tax charges on HMO as if they were 1bed single dwellings (eg charging x5 1bed council tax charges instead of 1x 5bed dwelling).
How do seasoned HMO landlords think about these political risks? It feels to me that the government need to come out and apply some national standards so we all know where we stand. Given the risks of the council changing the goal posts I am questioning whether a large capital outlay is the right idea. If other landlords feel like me given the uncertainty then in a way arent’s the council are actually restricting the supply of accommodation in their borough?
A very frustrated,