HMO council goal posts?

by Readers Question

4 years ago

HMO council goal posts?

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HMO council goal posts?

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% HMO council goal posts

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,

Jerry



Comments

Hi Jerry,

If I were you I would take 5 HMO district Councils and compare them all first. Check how different each operates. I am in the belief that the goal posts have changed when it comes to housing and accommodation. In Cardiff there are 10,000 plus on the council waiting list, how do we help as landlords? "We accommodate", therefore instead of say having a 3 person family in a 3 bed house, why not have 6 tenants there, all protected by safety laws etc. The problem we have as Landlords is that each council office, ie, housing, licensing, housing benefits etc have their own agenda (some good, some bad), and there comes a mix up in laws etc. God, if we have the spirit of co-operation in these areas then Landlords could really help the housing crisis! Watch this space for next year as councils will tell potential tenants that they have only 3 choices in the PRS (private rental sector), and that means when they come to us, we say, yes we can help, but only as a HMO room tenancy. It is so important that councils see HMO not as a moneyspinner for Landlords but as a real help to solve this country's housing crisis. Good luck Jerry.

Kevin

Jay James

4 years ago

Hi Kevin (AA properties)

What do you refer to when mentioning '3 choices' in your post above?

David Mensah

4 years ago

Another thing to check for is whether building control would consider that you are making "rooms for residential purposes" when you convert.
http://www.property118.com/building-regulations-sound-testing-hmo/69224/

when making an HMO you can end up dealing with planning (esp in Article 4), building control and environment. Each can have different requirements, that may not overlap. Some of this depend on how experienced they are, my guess is that in most London boroughs they will have worked out some of the teething problems of collaborating, but I'd check it first.


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