What is a house in multiple occupation?
A house in multiple occupation refers to residential properties where ‘common areas’ exist within the property and are shared by more than one household or tenant. A household is either a single person or members of the same family who live together. Most houses of multiple occupation have been subdivided from larger houses designed for and occupied by one family. The following normally applies for your property to qualify as a house in multiple occupation:
- at least 3 tenants live there, forming more than 1 household (for a ‘Large HMO’ this increases to 5 tenants)
- all of the tenants share toilet, bathroom or kitchen facilities with other each other – these facilities must all be adequate for the number of people on the application
- ‘Large houses in multiple occupation’ must be at least 3 stories high
- The minimum standards for room sizes are 6.52 square metres for a single person and 10.23 square metres for a couple.
- The proposed licence holder is a fit and proper person.
- The property management is satisfactory.
Who needs a House in multiple Occupation Licence?
If your property is smaller and rented to fewer people than the above criteria you, as a responsible Landlord, should always check with your local council as to whether you will still need a house of multiple occupation licence. This is because the exact definitions and conditions can potentially vary from council to council although the legislation should always be consulted.
We at Stark Uberoi work closely on a number of matters that involve the local authorities around our offices and are in constant contact with the property legislation. As a result, we will be able to provide you with comprehensive and clear information in order for you to apply for the correct licences.
The benefits of letting a house in multiple occupation
- As a landlord you are likely to get more money for renting out individual rooms as a house in multiple occupation to several tenants than you will get for renting out the whole house to one family tenant.
- In the current property market, you will have a better chance of finding individual people who are looking to just rent a room. This is compared to trying to find people wanting to rent a whole house.
- It is unlikely that all the individual rooms of the house of multiple occupation will be empty all at the same time – people will come and go at different times. Therefore, you will always have some rent coming in through the property. If you were renting out the whole house to one tenant and that family gives notice, then all the rent comes to an end and won’t start up again until a new tenant or family move into the property.
House in Multiple Occupation Restrictions
Licensing for houses in multiple occupation came into force on 6 April 2006 as implemented by the Housing Act 2004. This means that the local authorities have the power to regulate houses of multiple occupation within their areas with the aim of safeguarding tenants. The legislation enforced means that the failure to licence a house in multiple occupation or failure to comply with the management regulations for this type of property can lead to criminal prosecutions, substantial fines, orders to repay rent to affected tenants and banning orders.
Our experience in conveyancing and knowledge on these regulations will allow you peace of mind when organising a house in multiple occupation. We understand the increasing stress and anxiety that Landlords may face keeping up with the ever-changing legislation that surrounds the set up and management of houses of multiple occupation.
Special purpose vehicles
For some experienced property investors, it may be more tax efficient to own the HMO property in the name of a limited company, or a Special Purpose Vehicle (SPV).
The Starck Uberoi app
We are proud to announce that we have recently made an app available to our clients which gives them 24/7 tracking of their conveyancing transaction wherever they are. The app contains a multitude of features dedicated to keeping your conveyancing transaction quick, including an in-app live chat feature so that you can contact your dedicated solicitor quickly and easily from your phone, and a milestone feature which keeps every party updated as to what the next step in your conveyancing transaction is. For more information, please see our blog titled Online Conveyancing Solicitors.
Lender panels – which lenders work with HMO conveyancing?
Our west London property lawyers’ association with major lenders on lender panels such as Halifax, Santander, HSBC, Nationwide, NatWest, Coventry Building Society, Kent Reliance and Barclays. This means that we are able to talk to and act on behalf of major lenders and work with our in-house mortgage brokers to find the best HMO mortgage options available. These panels exist so that conveyancing firms do not have to supply the same data to different lenders, this ensures a consistent service between solicitors and lenders. These lenders often require their firms to be accredited under the law society’s Conveyancing quality scheme, this is because the panels allow the solicitor to act on behalf of the lender and therefore the firm needs to be of a specific quality to ensure an easy and smooth experience.
Lenders use your income, credit history and outgoing payments to determine what size of mortgage you are entitled to. Most of the time Lenders will only refuse to mortgage a property if it’s not reliable security and therefore only lend money if the equity of the property is equal to the amount of the loan this is because the lender needs to be confident in their ability to resell the property in the future or get the loan back. For information on what lender panels, we members of you can see a full list here.
Limited Company Conveyancing for Houses of multiple occupation
If you are looking to buy a house in multiple occupation (HMO) this is a good option – seek our advice.
For more information read our blog: Conveyancing for Limited Company purchase.
Possible conditions when taking out a mortgage on a HMO property
A HMO mortgage is similar to a Buy to Let mortgage. One of the conditions of the mortgage offer will be that you, as the owner, will be unable to occupy the property.
Your lender could ask that there must be tenancy agreements in place. The lender will request that you have a Gas Safety Certificate, EPC and they may also ask that you have completed the Government ‘How to Rent’ checklist. The lender will ask you to clarify if there have been any difficulties collecting rent or disrepair disputes with any existing tenants.
Here are some examples of HMO Special Mortgage Conditions that your lender may require to be satisfied:
- You must apply for a HMO License and supply a certified copy of this to the lender within 3 months of completion and you cannot use the property as a HMO without the license.
- You must have Planning Permission and Buildings Regulations Approval for use as a HMO.
- You must comply with all relevant legislations which may apply to you as a HMO Landlord
We at Starck Uberoi will check with the lender what needs to be done and satisfy their specific individual HMO requests in order for them to lend you the money.
Stamp Duty Relief
Stamp duty can be complex when buying a house in multiple occupation (HMO) and you may be entitled to a multiple dwelling’s relief depending on how the property has been arranged. We can assist you in this and ensure you pay the correct stamp duty and achieve the maximum relief. For more information read our Flat conversion, Stamp Duty Land Tax and claiming multiple dwellings relief blog.
How Starck Uberoi can help
Our expert conveyancers will complete the settlement and title transfer process by ensuring that you, our client, is meeting all legal obligations necessary for your property to be registered as a housing of multiple occupation. Additionally, we understand and aim to protect your rights during this transaction.
For more information, please visit our mortgage or Conveyancing pages, or to book an appointment please call 020 8840 6640. Our offices are based in Brentford, Ealing, Richmond, Canterbury and London Victoria. We can provide professional Notary Public services. For an appointment at any of our offices, email us at solicitor@starckuberoi.co.uk or call 0208 840 6640.
