For landlords of HMOs (multi-family housing units): some advice

 

There are a number of advantages for a residential landlord to have more than one tenant in a property, including economies of scale, the possibility of higher rental income, and the reduced risk of losing all tenants at once.

On the other hand, this may necessitate additional management time and effort, as well as compliance with new regulations, such as a licence from the local government.

Just what is an HMO, then? There are two types of House With Multiple Occupancy Essex: those that require a licence and those that don't.

When five or more non-related tenants from two or more households occupy a dwelling with a kitchen, bathroom, or toilet, the dwelling must be licenced since it meets the criteria for a multiple dwelling unit. Under this definition, a home that has been transformed into many sleeping quarters for guests would fall into this category. Buildings that were transformed into apartments following the 1991 Building Code are not typically included.

All tenants must occupy the property as their primary or only home. A home that is rented out to a student, nurse, or migrant worker will be considered their primary residence, and a home that is utilised as a haven for a family will be considered their only or primary house.

Any HMO that requires a licence from the government must have one, and either the owner or the management agent must apply for one. A five-year permit at a cost determined by the municipality rather than the federal government.

Requirements (many of which apply even if the HMO is not licensable) include keeping the property in a safe state at all times, which includes obtaining annual gas safety certificates, making sure there are no serious risks, and making sure there are sufficient exits in the case of a fire.

If a licence is required, but is not obtained, the offender faces criminal penalties and a fine of up to £20,000 plus costs. Violating the terms of a licence is a criminal offence punishable by a fine of up to £5,000 plus fees. The preceding list is not exhaustive, and local governments may issue licences for additional types of assets.

Property owners insurance may or may not have a direct bearing on HMOs, but insurers will still want to know the specifics of the occupancy, since it may alter the rate or the scope of the coverage they offer. For this reason, it's important to think about how "loss of rent" coverage is structured to make sure it meets your needs.

The contents of any furnished units you provide, as well as the common areas of the building, should be insured against theft or damage.

Rent guarantee insurance, in particular, may be of great assistance to landlords of HMOs, as it reimburses them for lost income up to a year after a tenant stops paying rent due to default (often excluding the first month's rent, as this is typically covered by the deposit). Eviction-related expenses (such as attorney fees) are also typically covered under schemes.

If you own a home or other property, it's smart to review your homeowner's insurance policy every so often to make sure you have the right amount of coverage at the right price.

You should constantly inquire as to the level of expertise of your insurance advisors in the specific field of insuring commercial properties for property owners.