Setting up a HMO Property

The key to the perfect HMO is location so always start by checking out the area around the property.

If the HMO your creating is for students.  Check the universities around the city, most importantly check out their student numbers and annual trends.  A university might have created an alternative Campus or sister universities in different cities, taking students from the city your looking to invest in.

If there has been a huge drop in numbers of students coming to the university, or if the university is arranging its own accommodation units, then you may want to consider creating your HMO specifically aimed at employed workers or professionals instead.

In this case, check out demand and find out what’s going on in the city.  Is there growth?  Is employment buoyant?  What Industries are there?

Look where the hospitals and business parks are located.  Do some online research.

Once you find a property, you need to check the property will actually work as an HMO.  Study the floorplans carefully and seek advice from builders who have local experience of creating HMOs. 

I recommend that you always adhere to the guidelines for HMO licensing.  Even if the property your creating does not currently need a licence.  Keep ahead of the game and protect yourself against the potential for future changes in regulations.  If your property is already finished to the standard required for licencing, then think of how less stressed you would be if licencing legislation changed and the competitive advantage you would have over your competition, now and in the future. If your property is already to a licence standard then think of how less stressed you would be if legislation was to change.

Due Diligence

Do your research and complete your ‘homework’ so you are confident with all your numbers.

Is there sufficient demand? What standard of accommodation is currently provided and at what price point? How much will acquisition and refurbishment cost and how much net income will the property generate? Is it worth it?

When creating an HMO property keep in mind exactly who you’re aiming to attract to the property: what is the target tenant profile?

Some things to consider when looking at the property

En-suite rooms are inherently more desirable and attract premium rent

Ideally, rooms should be double size rooms with enough space for double beds and comfortably conform with HMO guidance

A HMO licence granted under Part 2 of the Housing Act 2004 (that is pursuant to mandatory and additional licensing schemes) must contain conditions requiring the licence holder to ensure that any room used for sleeping accommodation is

  • Not less than 6.51 m2 for one person over 10 years;
  • Not less than 10.22 m2 for two persons over 10 years of age; and
  • Not less than 4.64 m2 for one person aged under 10 years.

The heating system should be of good standard and adequately sized for the property and the maximum number of tenants.  Each radiator should have its own thermostat.

Will the property have enough amenities for the number of tenants

Adequate air-ventilation to avoid mould problems

Check HHSRS

Fire safety, fire doors, lighting, escape routes

Electrics and Gas – these will need to be certificated

Will there be problems with parking ? Will the tenants need permits

Consider noise levels – if the property is located near a busy road, is there double glazing?

types of floor and the flooring to be used

wall construction and sound insulation

Adequate light

Don’t forget the amount of furniture and furnishings you’ll need

I have an in-depth guide in my book about finding the perfect property and setting it up correctly.