The Basics of HMO 1st Jul 2015
So you are considering going down the House in Multiple Occupation (HMO) route but what do you need to know?
An HMO license is required if you are renting out any property that is shared by three or more tenants who aren't members of the same family. Landlords must have a licence from the council for every HMO property that they own and let out. Hostels, bed sits, halls of residence all require an HMO license. If you are not sure whether your property needs to have an HMO license, you should contact your local authority for advice.
The purpose of an HMO is to ensure that certain standards are met by the landlord and the property:
• Is the landlord is a fit and proper person to hold a licence?
• Is the property managed properly?
• Does the property meet the required standards, regarding physical condition and facilities?
It is a criminal offence for a landlord to operate an HMO without a licence, and they could face a fine of up to £50,000. Local authorities also have the power to vary the terms of a licence or revoke a licence at any time if the owner or manager, or the living accommodation is deemed no longer suitable.
Landlords can register for an HMO license by contacting their local council. Each local authority sets their own fees and has their own requirements. Once the paperwork and fee have been submitted, a site notice must be displayed to notify neighbours, and the council and fire safety officers will arrange to inspect the property. During the inspection, works may be identified that need to be completed before the license is granted. Be aware that these works may not be cheap, and that the application process can take a while. Most licenses are granted for 1 year, and it is then up to the owner to reapply. Failure to do so will result in the license being withdrawn. A new application must then be applied for which is more costly than a renewal.
Managing the tenancy in an HMO property is not straightforward. There are more tenants and therefore more things can go wrong. Neighbours can object to HMO licence applications and can make life difficult for landlords. If neighbours object to an application, it may be necessary to appear before the Council's Regulatory Committee to answer the objections raised. This can be a daunting, time consuming and costly process.
Some landlords run tenancies on a ‘joint and several` basis, in which case tenants sign one lease, and are all responsible for the rent and bills. If any of them defaults, the others are required to cover those costs. Other landlords choose to rent out individual rooms within an HMO property. If this is the case, as occupants may not know each other, it is best practice to get everyone to sign an individual lease which makes their responsibilities clear. However the tenancy is run, be sure that tenants are fully aware of their liabilities before accepting the tenancy.
If you choose to go down the HMO route, it is certainly worth getting a reputable letting agent involved. The Key Place is very experienced in managing HMO properties and can deal with the complete HMO process for our landlords . . .we take the stress, worry and hard work away! Contact us now for further information.
For detailed information on HMO licenses, visit the Scottish Government, or your local authority websites.