UK Buy to Let Property Market and HMOs

  • 17 years ago
  • Uncategorized
A combination of the steadily rising student population and a decline in landlords investing in the UK House in Multiple Occupation (HMO) could mean it is just the time to get into the HMO Buy to let market in the UK.  
The multi tenanted houses which are legally defined as “houses which are occupied by persons who do not form a single household” are in decline. Last year saw significant number of landlords in the private rented sector drop out of HMO’s ownership. The decline was revealed in a Review and Index published by the Association of Residential Letting Agents (ARLA). In October 2006 The HMO share of the whole rental sector dropped from nine percent to six percent this coinciding with the requirement to register the properties with local authorities and could represent a loss of as many as 75,000 properties to the multiple sharer market.
The reason behind licensing of this type of housing was to protect the young and vulnerable people who are often found in these homes Licensing is tackling low standards of fire safety, overcrowding, inadequate facilities and poor or unscrupulous management. The sector of the market appears to be producing better housing for students but is still in short supply.
Houses in Multiple Occupation offer investors both capital appreciation and a potential monthly income. Buy to Let HMO’s tend to be larger homes and when the time comes to sell typically investors can be left with impressive amounts of equity.
HMO Houses For Sale
Under the changes in the Housing Act 2004, if you let a property which is one of the following types it is a House in Multiple Occupation:
An entire house or flat which is let to 3 or more tenants who form 2 or more households and who share a kitchen, bathroom or toilet.
A house which has been converted entirely into bed sits or other non-self-contained accommodation and which is let to 3 or more tenants who form two or more households and who share kitchen, bathroom or toilet facilities.
A converted house which contains one or more flats which are not wholly self contained (i.e. the flat does not contain within it a kitchen, bathroom and toilet) and which is occupied by 3 or more tenants who form two or more households.
A building which is converted entirely into self-contained flats if the conversion did not meet the standards of the 1991 Building Regulations and more than one-third of the flats are let on short-term tenancies.
In order to be an HMO the property must be used as the tenants’ only or main residence and it should be used solely or mainly to house tenants. Properties let to students and migrant workers will be treated as their only or main residence and the same will apply to properties which are used as domestic refuges.
Residential Landlords Association
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