What is an HMO Property? Its Benefits & Point of Differenciation

HMO accommodation, also known as House of Multiple Occupations, is an increasingly popular accommodation arrangement that offers unique advantages to both tenants and investors. As the demand for affordable housing rises along with the increasing population, HMOs have given a practical solution. In this article, we will not only be checking out the world of HMO accommodation but also exploring its benefits, regulations and considerations.

Understanding HMO Accommodation

HMO accommodation involves renting out individual rooms in a shared property to separate tenants, while common areas like kitchens and bathrooms are shared among the occupants. This arrangement is particularly popular among students, young professionals, and individuals seeking budget-friendly housing options. 

HMO Licensing

According to the Housing Act 2004, large HMOs must possess an HMO licence. Not all HMOs require a licence, but the HMO rental property that fits the definition of a large HMO has to get one. Large HMOs define properties with 5 more tenants that share more than one household facility, such as a kitchen, toilet or bathroom over more than three floors. Reading along the lines with the government of the UK. You can get information about HMO Licensing requirements in the UK here!

Benefits of HMO Accommodation

HMO accommodation offers a lot of benefits other than being a great option for those who would like to live close to their university but don't want to buy or rent their own property. Some of the benefits of HMO accommodations are as follows:

1. Increased Rental Income

Renting out multiple rooms in a single property significantly boosts the potential rental income for property owners. This makes HMOs an attractive investment opportunity, as the returns can be considerably higher compared to traditional single-tenant rental properties.

2. Mitigated Risk

With multiple tenants occupying different rooms, the risk of having an entirely vacant property is minimised. Even if one tenant moves out, the income stream remains stable from the other tenants, reducing the financial impact on property owners.

3. Affordability for Tenants

HMO accommodation provides tenants with the chance to live in desirable locations at a more affordable price point. Sharing living spaces and splitting bills can help individuals save money while still enjoying a comfortable living environment.

4. Built-in Social Network

HMOs offer tenants the opportunity to live with other like-minded individuals. This built-in social network can be particularly appealing to newcomers in a city or to students who want to connect with peers.

5. Fully Furnished Option

HMOs often come fully furnished, making it convenient for tenants who might be relocating or unable to invest in their own furnishings. This adds an additional layer of appeal to potential renters.

6. Professional Management

Many HMO property owners choose to hire property management companies to handle day-to-day operations, including tenant screening, maintenance, and rent collection. This makes managing an HMO property more streamlined for busy investors.

What standards need to be maintained in HMOs?

When it comes to House in Multiple Occupation (HMO) accommodations, maintaining high standards is crucial for the well-being of both tenants and property owners. Due to the increased number of occupants and shared living spaces, there are specific standards that need to be upheld to ensure safety, comfort, and legal compliance. Here is a guide that explains all major house rules of HMO student accommodations. Here are some key standards that need to be maintained in HMOs:

1. Fire Safety Measures

HMO accommodations typically have more tenants than standard rental properties, which increases the fire risk. As such, HMOs are required to have adequate fire safety measures in place, including fire alarms, extinguishers, fire-resistant doors, and escape routes.  This guide on HMO fire regulations has all the regulations you need to know!

2. Sanitation and Hygiene

Proper sanitation and hygiene are paramount in shared accommodations. Regular cleaning of common areas, bathrooms, and kitchens is essential to prevent the spread of illnesses and maintain a healthy living environment.

3. Facilities and Amenities

‍HMOs must provide sufficient facilities and amenities for all tenants. This includes an appropriate number of bathrooms and kitchen spaces to prevent overcrowding and ensure everyone's comfort.

4. Security and Privacy

‍While HMOs involve shared spaces, tenants must still have a sense of security and privacy. Adequate locks on bedroom doors, secure entry points, and respectful tenant behaviour are important to maintain a sense of personal space.

5. Tenant Compatibility

‍Property owners should strive to maintain a harmonious living environment by selecting tenants who are likely to get along well. This can help prevent conflicts and contribute to a positive atmosphere within the property.

6. Regular Maintenance

‍Regular maintenance of the property is essential to address issues promptly and prevent them from escalating. This includes repairing appliances, addressing plumbing and electrical issues, and ensuring the overall safety and functionality of the property.

7. Legal Compliance

HMOs are subject to specific regulations and licensing requirements that vary depending on the location. Property owners must ensure they are in compliance with these regulations to avoid legal issues and potential fines.

How do HMOs differ from other rental properties?

Houses in Multiple Occupation (HMO) accommodations differ from other rental properties in several key ways due to their shared living arrangement and increased number of occupants. Here's how HMOs stand apart:

1. Shared Spaces

Compared to Co-living, there are several differences between co-living and HMOs! In HMOs, common areas such as kitchens, bathrooms, and sometimes living rooms are shared among the tenants. This fosters a sense of community and can provide a more social living experience compared to traditional rental properties. Read our guide to understand the differences between co-living and HMOs in detail.

2. Higher Occupancy

HMOs house multiple tenants, often in individual rooms. This leads to higher occupancy rates compared to single-tenant rental properties, reducing the risk of vacancies and potentially increasing rental income.

3. Rental Income Potential

Due to the multiple tenancy structure, HMOs have the potential to generate higher rental income than traditional rental properties. The combined rent from multiple tenants can offset operating costs and yield greater profits.

4. Regulations and Licensing

HMO accommodations are subject to stricter regulations and licensing requirements due to the increased number of occupants and potential fire hazards. Compliance with these regulations is essential to ensure the safety and well-being of tenants.

5. Tenant Dynamics

With multiple tenants living together, HMOs require careful consideration of tenant dynamics. Selecting compatible tenants can contribute to a positive living environment and minimise conflicts.

6. Property Management

Managing an HMO accommodation can be more complex than managing a single-tenant rental. Property owners often opt for professional property management services to handle tenant issues, maintenance, and compliance.

7. Tenant Preferences

HMO accommodations are often preferred by students, young professionals, and individuals looking for affordable housing options. These tenants are often willing to compromise on privacy in exchange for cost savings and social interaction.

HMO student accommodation presents an attractive housing solution for both property owners and tenants alike. The increased rental income potential, mitigated risk, and affordability make HMOs appealing investments. However, it's essential to navigate the regulatory landscape, maintain safety standards, and consider tenant compatibility to reap the rewards of this thriving property market. Whether you're a property investor looking to maximise returns or a tenant seeking affordable housing without sacrificing quality, HMO student housing offers a compelling solution in today's dynamic real estate landscape. There are several  types of HMO accommodations you can explore and choose your ideal one!. Explore our guide on types of houses in multiple occupation for better understanding.