A home in multiple occupation – referred to as an HMO – is a type of property that is rented to three tenants or more who do not belong to the same household (i.e. a family). 
There are numerous landlords that rent HMOs since they consider them to be an efficient way of running a rental portfolio (at times due to having the ability to collect rent from more tenants, although property type and location are drivers of this decision as well).
Some renters might choose to live in an HMO since their monthly payments might be less expensive and they might prefer living with more individuals. House-shares are especially common among students and renters and, as more individuals rent for longer periods of time, for some landlords HMOs are continuing to be a viable option.
If you are thinking about converting property of yours into an HMO, there are several different steps that will need to be taken; from meeting various legal requirements to converting the property so that it is habitable for more individuals, read this guide from Fourwalls for more information.
Before You Get Started
An HMO licence is required for most HMOs. If your property is let out to five tenants or more from more than just one household and is three storeys high at least and that tenants share kitchen facilities, a bathroom, or toilet, then you definitely will need to get a licence.
If not all, but some, of the criteria apply, you might still need a licence, and it is a good idea to check with the local authority. An HMO licence is valid for a period of five years and you will need to have a separate licence for every HMO you have.
To comply, you will have to ensure that each year you send a valid gas safety certificate, and smoke alarms will have to be installed, and electrical appliance safety certificates need to be available upon request.
Depending on the amount of work that the property needs to have done to convert it, you might need planning permission as well to allow you to make certain changes. When those kinds of activities are being carried out, it is always a good idea to ensure that you keep records of all of your approvals, applications, and correspondence to make sure that in the future you are covered.
The Practicalities Involved in Converting a Property
First of all, you will need to consider what your tenants will need and the amount of space that will be required. It is also very important to consider the level of appliances and furniture that you are going to provide.
Within five years of a property being converted to an HMO, the council will visit all rental properties, and they conduct a risk assessment for the Housing Health and Safety Rating System. If during the assessment, if there are any unacceptable risks that are discovered, they will have to be addressed.
Likely you will be converting some of the rooms’ use. For example, you might be converted a spare room into an additional bathroom or a reception room into an extra bedroom.
Also, you might need to build or move walls to alter the size of a room – those are all aspects that you will need to carefully plan before you undertake the conversion process. Of course, it is recommended that you use a professional while working on significant aspects of the conversion.
Some garages are converted by landlords to create extra space. Quite often they will require planning permission, and there you will have to check with your local authorities.
It is often essential to convert reception rooms, but it isn’t always the right decision to make. In an ideal situation, property will have two separate reception rooms – where one can be converted, while the other room can be left as a living space or dining room, so that is something that will have to be considered carefully.
What Else Should You Consider?
One major difference between a standard rental property and an HMO is you may experience a higher turnover rate of tenants. That is why it is recommended that you save two months of rent at least every year in order to cover any potential void periods.
It can be a profitable investment to convert a property into an HMO, but it does work more upkeep and work.