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Navigating the Legal Process for the Sale or Purchase of Houses in Multiple Occupation

By Chris Williams, Conveyancing Solicitor

Houses in Multiple Occupation (HMOs) are becoming an increasingly popular form of housing, especially in urban areas where demand for affordable and flexible living accommodation is high. This article delves into the world of HMOs, covering what they are, the regulatory requirements they must meet, the unique aspects of HMO conveyancing compared to standard conveyancing, and the financial considerations involved.

What is an HMO?

A House in Multiple Occupation (“HMO”) is a property occupied by three or more people who form more than one household and share facilities like the kitchen or bathroom. This broad definition encompasses a variety of living arrangements, from traditional shared houses and student accommodation to more modern co-living spaces. The goal of HMOs is to provide affordable housing options and efficiently utilise existing properties to meet the demands of a growing population.

Regulatory Requirements

HMOs are subject to specific regulations to ensure the safety and well-being of the occupants. Regulatory requirements often include:

a. Licensing: In many regions, HMOs must be licensed by the local authority. This involves meeting certain standards related to the property’s condition, fire safety measures, and the suitability of the accommodation. When purchasing an HMO property, it is important to check the licensing provisions in place, but to remember that HMO licences are not transferable so any new owner will need to apply for their own licence.

b. Health and Safety: HMO landlords must adhere to health and safety regulations, such as providing adequate fire escapes, maintaining gas and electrical safety, and ensuring common areas are kept in good repair.

c. Room Sizes and Amenities: There may be regulations regarding the minimum size of rooms and the provision of basic amenities, such as kitchen and bathroom facilities, to ensure the living conditions are suitable.

d. Management Standards: Landlords must demonstrate that they are capable of managing the property effectively, including dealing with repairs, tenant disputes, and other issues that may arise.

Financing an HMO

Financing an HMO can be more complex than financing a standard residential property. You should speak with a suitably qualified mortgage advisor before making any decisions. Considerations include:

a. Specialist Mortgages: HMO investors often require specialist mortgages designed for non-standard properties. These mortgages may have different criteria and interest rates compared to conventional residential mortgages.

b. Rental Income: Lenders may assess the potential rental income of the HMO when determining eligibility for a mortgage. Demonstrating a reliable income stream from the property is crucial for securing financing.

c. Costs of Compliance: Investors should budget for the costs of bringing the property into compliance with HMO regulations. This may include safety improvements, licensing fees, and other expenses to meet regulatory standards.

How HMO Conveyancing Differs from Standard Conveyancing

Conveyancing for HMOs involves additional considerations compared to standard residential properties. Key differences include:

a. Due Diligence: Buyers and sellers involved in HMO transactions must conduct thorough due diligence to ensure the property complies with local HMO regulations. This includes checking for the necessary licenses and confirming that the property meets safety standards.

b. Additional Costs: HMO conveyancing may involve additional costs related to the additional work involved, such as checking multiple tenancy agreements or addressing any outstanding issues identified during due diligence.

c. Lender Requirements: Financing an HMO may require specialist mortgages. Some mortgage lenders may have specific criteria for HMO properties, considering factors such as the number of units and the property’s overall condition.

Conclusion

Investing in Houses in Multiple Occupation can be a rewarding venture, providing affordable housing solutions and capitalising on the growing demand for shared living spaces. However, navigating the regulatory landscape, understanding the nuances of HMO conveyancing, and managing the financial aspects require careful consideration. By staying informed and seeking professional advice from solicitors and mortgage advisors, investors can successfully navigate the complexities of HMOs and contribute to the evolving landscape of modern housing.

At Oliver & Co Solicitors we are proud to have a highly experienced Property team who are dedicated to making your transaction as hassle-free as possible.

If you are currently looking to buy or sell an HMO property and would like expert advice, call our friendly and professional team today on 01244 312306 and we will be happy to advise and assist you in your new venture.

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