Ask Matthew Your Property Questions
19 June 2008
121 Comments
Yes folks, here's the section where you can ask me questions on any property-related topics that you just can't find the answer for.
I'll try my best to answer as many as I can; I may sometimes refer you elsewhere but I will endeavour to make sure that we get all of your questions answered.
So, keep them coming and I look forward to helping you with your property exploits.
I'll try my best to answer as many as I can; I may sometimes refer you elsewhere but I will endeavour to make sure that we get all of your questions answered.
So, keep them coming and I look forward to helping you with your property exploits.
Hi Mathew, when is your next HMO workshop?
Hi Brian
Good to have you with us.
The next workshop is actually REALLY soon – takes place on Saturday 19th July in Milton Keynes. For more details go to http://www.hmocashflowsuccesssystem.com
As a special exclusive for my blog readers only, I’m doing a special deal for you. I can’t really disclose it on the site but for more details, send me a note at info @ your hmo expert dot com
Hi Matthew, I understand some HMO landlords use License Agreements instead of ASTs. Could you explain the difference and the pros and cons?
Hi cdullea
I’ll admit that this is not as clear-cut as many think and you really need to take advice from a solicitor who is experienced in tenancy law.
The basic premise is that a licence agreement gives the landlord additional rights over and above the tenancy agreement – such as being able to move the tenant to a different room, move the tenant out quicker etc.
However, what many landlords don’t realise is that after 6 months, it AUTOMATICALLY converts to a periodic tenancy which gives the tenant the same rights as a normal AST.
I think its essential to use a Licence Agreement if you are taking somebody for less than 6 months – ie a short term let – we often do lets of up to 8 weeks but if you are planning on making a professional business out of HMO’s – you’re probably better-off sticking to AST’s.
Hello Matthew,
First of all, thanks for a great site into a subject that needs a fair amount of examination and explaining.
My question concerns defining my property as a HMO or not. I have a 1st and 2nd floor maisonette, with a ground floor entrance.
There is a commercial business on the ground floor but we only have a staircase on the ground floor which is fully separated from the commercial occupant by a normal wall.
Will the council count this property as having 2 or 3 storeys?
I have 4 bedrooms and will only ever have 4 occupants.
I have a mains powered & interlinked smoke alarm system and a CO2 fire extinguisher in the kitchen area.
I do not have fire doors, but the doors to all the rooms except the kitchen are old solid victorian doors.
What I want to know is how will my property be classified and what alterations do you think I will have to make?
Thanks very much.
ShinyLL
Hi Shiny
Thanks for your comments – I appreciate them.
The key criteria for defining your HMO are occupants, amenities and storey’s.
So the first key one is occupants – you state that you are only going to have 4 occupants.
The second is amenities – I assume they will be sharing kitchen and bathroom facilities.
The third is storeys – you state that it is 3 storeys.
In terms of its classification – yes it is a HMO but no it will not be licenced (although depending on the area, it may fall under selective licencing).
You won’t technically need to make any alterations but I’d advise putting a fire blanket and heat detector in the kitchen together with replacement of doors as and when they fail.
You can also check out this fuller article I posted here:
http://yourhmoexpert.com/hmo-regulations/hmo-regulations-in-a-nutshell/#more-32
Hope this helps
Matthew
Hi!
I am just starting out as a letting agent in the Nottingham area, but have been thrown in right at the deep end with my first job i’m afraid with a possible HMO on my hands!
The landlord of the property is actually my dad, and this being his first rental property we are looking into letting it out as a multilet to achieve the best rental income for it.
The property is a 4 double bed with 2 floors and aiming for just one tenant in each room. So i believe licencing will not be required for this one… however, i do have a few other questions i’m hoping you more experienced guys can help me with.
He is unsure what exactly he must provide in the way of furnishing in a multilet… should he wait and ask each tenant if they have their own furniture? The only tenants he is allowing in the property are professionals in full time work, as the property is refurbished to a very high standard (he was planning to sell, but with the current market this is not possible now)
So…. should he provide furniture for each tenant/ask them if they have their own? He has a washer and dryer in there, an oven too, but must he provide more?
Also, he wants to not include the bills in with the rental, and both he and i need to find out how this would work. Who’s name should the bills be in in this case? Are there any bills which must be in the landlords name? Is this the best way to do it? I dont want to advise him to include the bills in the rent as i have no experience of doing this and obviously dont want to advise wrongly. Also, what happens if there is a disagreement between the tenants about who pays what for each bill?
Would each tenant have their own AST in the case of a multilet or is it the norm to have a special HMO AST to cover all tenants?
Thanks in advance for your advice!
Best wishes
Sally
Hi Sally,
thanks for your questions which are great!
I’ll answer each in turn.
1. Furniture. Its common practice to provide furniture for your HMO’s – why? Because most people moving into HMO’s have little or no furniture and would expect it to be provided for them. You don’t need to spend the earth but at the very minimum, I’d expect bed, mattress, mattress protector, 2 bedside chests, chest of drawers and wardrobe. If its a large room, we often include a nice easy chair as well.
You will also want to furnish the lounge with sofas, coffee table, TV and dining room with a table and chairs.
For a quote on furniture, visit my preferred suppliers http://www.furnitsure.com and ask for a bespoke quote – last time I looked, they were doing a 5 bedroom house for £3899 including lounge/dining room furniture.
2. Bills. It is also common practice to include bills in the rent unless each room is self-contained and has its own meter. Bills will cost you about £100 per tenant per month. If you don’t want to include them; good luck but I suspect the hassle will not be worth it eventually. Its only really student lets where they pay all the bills as they are in for one year and responsibility is theres.
3. AST’s. Most lenders want a single AST – in practice, this doesn’t happen. So just use a single AST for each tenant. Or Licence Agreement if you want a bit more short-term protection.
4. Licencing. I’d check with your local council what needs to be done – although it will not need mandatory licencing, they may have selective licening conditions in Nottingham and it is still a HMO so will need to meet basic HSRS guidelines such as fire alarms, extinquishers, means of escape etc.
hope this helps
Matthew
Hello.
2 questions.
I am moving in with my partner and am looking to rent my flat to a family friend and 2 of his friends.
At the moment, the flat is 2 bedrooms and 2 floors. (downstairs living, upstairs bedrooms).
There is a box room which is more than big enough to make a third bedroom.
1) Is there anything I would need to do to change it from a 2 bedroom to 3 bedroom flat, and what would be the cost (if anything) of this?
2) Would I need a HMO license for
a) Letting to the 3 of them,
b) Letting to just 2 of them.
Any help would be appreciated, it’s all new to me.
Hi Gavin,
thanks for your question which is a great one to ask as the law can be somewhat vague!
Basically, as soon as you rent out anything to more than 2 people it is classified as a HMO and certain regulations may come into force (ie fire doors, fire safety etc).
In most areas you wouldn’t need a licence but would need to follow the Housing Health and Safety Rating System to ensure your property comes up to standard.
Its worth giving your local council a call and talking to the Environmental Health team to see whether you need to do anything else.
Otherwise, just let to 2 of them.
One thing to point out is if the other 2 people are a couple, then technically they are 2 households which depending on the councils definition may mean that you do not have to consider any other HMO regulations. However, you would still need to work through the HHRS regulations.
hope this helps
Matthew
PS by the way, the box room should ideally be a minimum of 6.5 square metres in order to use as a room but again, it can differ from council to council. Give them a ring – they don’t bite.
Hi Matthew-raising deposits to purchase any rental properties currently is very challenging but it would appear that for a hmo it is even more difficult. Can you give an advice on raising a deposit for hmo as I would like to ensure that finances are in place before I start investigating market more thoroughly in my area. Thanks
Hi Jane,
OK – the best advice I can give you here is to get the very best deal you can relative to the value of the property. The larger the level of discount that you are able to achieve, then the larger the amount of equity that you can lock in when you purchase the property.
We have lenders in place that can lend to you based on the valuation price and not the purchase price which sometimes can allow you to use the difference as your deposit.
hope this helps
Matthew
Matthew thanks for reply for finance. Sounds like no money down finance which I am familiar with. Should I be looking for a discount of at least 30% off market value for this system to work?
Hi Jane,
Yes ideally you should be looking for 35-40% off but 30% will get you most of the way there!
Good luck and once you’ve found something, let me know.
Matthew
Matthew thinking about what type of market to target. There is talk currently that in the climate it is best to stick with tenants that are on LHA as you know their rent is going to be paid. This means that your rent will stick at a certain level rather than go higher with professional market. What are your views on this? Thanks for your answers, this is really helping.
hi Jane,
There are four types of market – all with their own characteristics. You can make money with LHA tenants but don’t count on being paid on time if at all depending on the type of LHA tenants they are!
I stick to professionals myself and just build in voids/bad debtors!
Hi Matthew, I’m looking at acquiring a property through a purchase option in Rhyl, North Wales. The property has 8 bedrooms and four reception rooms. Use to be a B&B, currently used as a private residential home.
I have made enquiries with the local council who say they are not granting any more HMO licences, though they also tell me that out of a total of 850 HMO’s, only 50 are licensed. What is the risk I am taking if I bring the property up to HMO regs. and let out to 8+ tenants, but don’t get a licence? What would the process be if I had a surprise visit from the local HMO officer?
Hi Maninder,
You are taking significant risks with taking this strategy. I would not advise this.
You can ask if they are ok to allow HMO’s that are less than 4 (ie unlicenced) but I suspect they will say no.
I would recommend converting to flats if you can gain permission.
Otherwise, you could see if it may be suitable for social housing which they may be amenable too?
Hi Matthew,
I currenly have 4 buy to lets, but would really like to add an HMO to my portfolio. I have read lots on the internet, but with only about £8,000 to invest, I am not sure where to start. My husband is not convinced and can not persuade him to spend out on any mentoring sessions or educational days that offer no money down info. Please help……
Hi Andrea,
thanks for your note. The best place for you to start is with my FREE 10-part ecourse on HMO’s. You’ll get one a day for about 2 weeks. This gives you the basics of where to start. If you need more help, then look at http://www.hmosurvivalguide.com which is my entry-level product for only $7 and its a 90-day plan that if you stick to, you can achieve.
Other than that, send me an email and see if we can work something out or have a chat.
Or, we could source something for you. But do be aware that you’ll need between £10-15K to deck out a HMO in real terms to get your tenants in. Hope this helps.
Hi Matthew,
I like your site and I got your survival guide, but I have a very specific aim and I don’t know if it is realistic and I am hoping that you can help!
I have bought 2 buy to lets, which are cash positive, but were bought on a long term strategy for my pension.
Now I need to generate more cashflow.
For personal reasons I would also like to move out of my present house and as it is a large 6 bed/3 receptions I wondered if it could be a successful HMO?
To be honest if I were to buy an HMO I would follow your advice and probably not start with this property, but now doesn’t seem the sensible time to sell. It has 3 floors and the only potential tenants would be on housing benefit. If this could work I would also need to fund the purchase of a smaller house where I want to live and equip this house as an HMO, but there is equity in the property.
On the positive side – if this could work the cash flow could be excellent as I only need £400.00 approx per month to pay the mortgage.
I am going to the Property Exhibition on Saturday and if you think that you could help me, maybe we could have a quick chat?
Hi Jenny
great to hear from you and really good to hear that you are considering getting into the HMO market.
First of all, you need to understand the demand in your area – have you signed up to my 10-part ecourse and gone through the RENTAL DEMAND part of the course – to see what type of markets are available to you?
Secondly, once you’ve determined that there is demand, you then need to ring your local council and find out their stance on licencing. It’s likely to need a mandatory licence with it being 3 floors and 6 bedrooms but check first. They are usually very helpful and may even come out and look it over for you.
Thirdly, you need to let your lender know that you’ll be letting. Speak to me about the best way to go about doing this on Saturday.
Fourthly, you’ll need some furniture unless you already have suitable stuff, so take a look at http://www.furnitsure.com
Fifthly, you may need to install other safety measures such as fire doors & fire alarms. I can help on both depending on where you are in the country.
hope this helps – lets speak at the property exhibition on Saturday- anybody else coming – I am speaking at 12.00pm?
http://www.rhettlewis.com/propertyexhibition
Hi Mathew,i subscribe to YPN magazine and thats where i found your articale,i must say that i have read everthing i possibly can and i find you to be very honest,true and very helpful.I currently have four BTL but im now looking to do HMOS since following your ecourse but i live in liverpool and i cant seem to find the right area for professionals can you please help me on this matter thanks jeff. PS Is there any chance you could come to Liverpool to do your seminars or would you consider doing a subscription site where by we could pay every month for your services,i would be grateful for your answers to my comments.
Hi Jeff, thank you for your kind comments – I really appreciate them! I do try and tell everything how it is so you know both the risks and the opportunities.
OK – I know people who do lets in Liverpool but generally in the suburbs (not too sure of the names) to professionals. You need to follow the ecourse guide (hopefully you’ve signed up at the top-right hand side of the site) and use spareroom to do your research.
I am thinking of coming up to manchester to do a course but dependent on a few factors. I am also looking at a subscription site at the moment which I think might be right up your street!
Keep in contact – Matthew
Hi
Have you had any experience issuing a section 8 as this is something i am considering doing as I have a tenant who has paid no rent for over the two months needed to serve this notice
cheers
Kurtis
Hi Kurt,
Yes a section 8 can be issued once the tenant is two months in arrears. This gives them 14 days to settle up or get out. There are different grounds you can evict them on but generally I use grounds 8, 10 and 11.
If they do not leave, you then need to apply for a possession hearing at court. This will take about a month to get a hearing.
Good luck!
And remember, you can only use a Section 8 if you are using an AST!
Hello Matthew,
Thanks for a great site. Me and two of my friends are trying to rent 3 storey, 4 bed house. We are just friends.
Does landlord need HMO Licence to let us this particular property?
Cheers
Tomas
Hi Tomas,
nice to hear from you and thanks for the kind words.
OK – if there are 3 of you, then it will be classified as a HMO but you generally won’t need a licence. However, this is the landlord’s responsibility to speak to the council about this.
For your own safety, there should be fire alarms in the property at the very least plus a heat detector in the kitchen and fire doors on all hot areas.
Hi Matthew
I have seen your peice in YPN and was excited to see ‘we can do it for you’ as the closing line. Question is what do you do? I have a number of houses which I would like to start converting to HMOs once they become vacant but as a remote landlord (houses in Northants, Leics and Beds and I live in Surrey) I cannot manage them. Do you do it for me as you say or do you provide training workshops for me to do it myself? thanks Richard
Mathew, I always read your stuff in the YPN mags as I have 3 hmo’s + various single lets, but Ive heard alot about nmd deals and wealth angels etc, what I’m getting it is I see lots of deals every day that would stack up but funding is always a problem with cash tied up in excisting, as you no Hull is a student town with bags of potencial, have you any tips on funding.
Andy
Hi Richard, sorry for the delay in responding to your question!
Yes, we can set-up, manage and run your HMO for you if it is suitable to be let as a HMO. I am based in Northants and we already cover Northants, Bedfordshire, Cambridgeshire and Derbyshire. Adding in Leicestershire wouldn’t be a problem.
We also do training workshops as well but this is for if you want to let them yourself really.
Hi Andy, the best way for funding right now is through commercial route or to avoid cash, use lease options although your hit ratio will probably be lower as most owners want to SELL. Yes Hull is a great town and where I’m from originally!
Hi
I am a landlord letting only to students.I ask if they are students but do not verify if they are as the AST agreement(though some have stayed for less than 6 months so should have been a licence?) says they are responsible for council tax. I noticed on an earlier thread that you say it may not be an HMO if 2 or less people? I have not had more than 2 students in at any one time…not intentional as it is a 4 bed place. My question is, if council say I am responsible for tax and my tenants are found to have been lying about being students, where do I stand? Thanks
Hi Matthew,
I have some fundsto invest and was looking into HMO. Mortgage lender is OK with HMO aslong as the property doesn’t come under mandatory or additional licensing. Only gripe is that the lender insists on the the property under a single AST. Multiple AST’s not allowed. How do i overcome this, rent the rooms out under license agreements ? What about longer term room renters (12 months) ?
Your advice would be most appreciated.
Regards,
Nav
Hi Nav, you could let the property out to your management company who you then give permission to sub-let the property too? Otherwise, even a licence agreement becomes an AST after 6 months so you can’t relaly get out of it this way either. Long-term tenants make no difference to the lender or the type of agreement really.
Best to find a lender who is happy lending on HMO’s to multiple AST’s or follow above instructions.
Hi Matthew,
Thanks for the great Website!
Do you have any tips on how to minimise the utility bills for the landlord where water, heating and lighting are included in the rent?
You mentioned in another post that bills can be £100 per tenant per month but do you let the tenants have the heating on 24/7 for example?
Thanks
David
Hi David, the utility bills can be hit and miss. I recommend a) having the heating on timer controls b) ensuring tenants are aware that excess bills WILL be charged for c) managing the utilities pro-actively by regular inspections, monthly meter readings and trying wherever possible to bring in environmentally friendly measures (ie energy saving lamps, insulation etc)
Could the management company be my own company who i am the director of ? After, all the the compant is an entity in its own right. As i have now found a lender on HMO’s but single AST, however they allow company lets. So in theory i can let my property to my company who i then give permission to sub-let.
Hi Nav, yes this is correct, you can do this!
Matthew
Dear Matthew
Help! We have own 6 properties. 2 x 3 bed cottages , 1x 4 bed house, 1 x five bed house (our former family home), 1 x 5 bed flat and 1 x 4 bed flat. Our houses are all let on single ASTs to students at the University renting for 11 months at a time and living in friendship groups. The rooms are in houses/flats that also have a large sitting room/dining room, kitchen, one bathroom in the case of the two cottages and the 4 bed house, two bathrooms in all the other proerties. The kids all live there on a home from home basis and none of the properties are run as bedsits. Each property has a AST which they have all signed appertaining to that property. We have always adhered to the strict guidelines of the University Accommodations and so have fire doors on all the kitchens in all the properties as well as fire blankets, fire extinguishers, smoke detectors (in the case of the flats hard wired smoke alarms).The Council here in Eastbourne have written and told us that the properties are all HMOs and as such will have to have basins in each room when the property has four or more living in them. In the case of the house that is not so much of a problem, but in the case of the Victorian Mansion flats where we completely refurbished and installed two bathrooms in each property it really seems a bit excessive. What is our position? Is there no regulation that covers single ASTs with students house sharing. They are always friends who get together to share and this is the norm.
Hi Pennie, wow washhand basins – thats a blast from the past! This part of the Act was actually moved towards being taken out in October 2007 but its not been removed from Stature yet and won’t be until the next Housing Act is passed.
My response would be twofold – 1) contact your landlord association regional rep – NLA has fought on this front many times and get them to help you talk to the council about this – 2) send them a letter stating that you believe this is above and beyond the Act and most councils are not enforcing this because they expect it to be removed in the next Housing Act update.
If they insist, then I would personally then go to the Residential Property Tribunal through the appeals process.
best of luck with this – none of my councils has made me do this and we have HMO’s in 5 districts and 3 counties!
Hi Matthew, I have a property that I rent out to 10 students as a shared house. They are all friends who have lived together before and I have them signed up to a single AST for which they are jointly and severally responsible. They have no locks on doors, share a living room and 2 adjoining kitchens, and to all intents and purposes live as a joint household. I have 2 problems: 1st, the neighbours don’t want students living next to them and have complained to their friend, the leader of the local council – and as a result I am now being pursued vigorously for apparently breaching planning permission due to an alleged change of use from a dwelling house to an HMO. I can see that I need an HMO licence but cannot understand whay there is a material change of use – am told by the council that once you go over 6 people in a property it automatically requires planning permission – is this correct? My second problem is that since they moved in it has transpired that one of the students has turned out to be part time – and the council are now saying I am liable for council tax. Is this true?
Hi Christian, hmm bad news on your neighbours!
On the planning side, the national guidelines stipulate 7 or more requires a change of use from a private residential home to a HMO. If you have run this as a HMO for some time and it was run as a HMO before you owned it, then the granting of the change of use should be fairly painfree. However, this is before the neighbours got involved. I do not know if any noise pollution has occured but a quiet word in the students ears wouldn’t go amiss.
On the council tax front, then this is a difficult one as I do not know the rules for a part-time vs full-time student so would advise that you follow up and investigate this further. If it means you have to pay X%, then charge this to the student(s) who failed to disclose this to begin with! I wish you luck – report back on how you get on!
Hi Matthew
The neighbouring property to us has been sold and the builder is turning the downstairs into a bedroom with seperate lounge and the same upstairs with shared kitchen & bathroom and occupants will have their own locked door (but share the front door). I am not writing asking how to stop this as I appreciate the climate is such that people cannot afford to buy houses and need accommodation. My concern is that of noise pollution as our houses were built in the 1940s and only have a brick and breeze block with no gap for cavity insullation to minimise noise between the walls. If the builder is turning the house from a single household to shared (I am getting conflicting research on whether this qualifies as an HMO), but should he at least be looking at some sound proofing on the party wall? Should he also be getting planning permission?
Thank you for your guidance if able.
Jackie
Hello Jackie, an interesting one. I would speak to the builder to see if he is putting insulation in and explain your predicament. You can also talk to building control as he should be using them if he is doing a conversion. Whether he needs planning or not I cannot comment on as I don’t know how much “conversion” he is doing.
A HMO is where 2 or more unrelated people share so sounds like it will be a HMO. It sounds like flats though with a shared kitchen/bathroom but you’d need to supply more info.
Main thing is getting your insulation sorted though but if they have professional tenants, they shouldn’t be that noisy.
Hi Matthew,
Thank you for the useful emails you have been sending me since attending the last Landlord & Buy to let show.
We have a detached 4 bedrooms, two receptions, double garage property in West Molesey, which is currently the family home. We have been unable to sell in the present market. We are considering converting it to HMO for 5 professional tenants. Is it a good idea to use a detached house as HMO? I have read somewhere that the returns are better when the property is a mid terrace. Is this the case?
Regards
Lydia
Hi Lydia, detached houses are fabulous for HMO’s! Go for it, just test demand first and if it looks ok, then get on with getting it converted. let me know how you get on!
Matthew
PS and thanks for comments on the ecourse, glad you are enjoying it!
Hi Matthew
Came to see you give your talk in Ipswich and talked to you afterwards – got an urgent need to find finance for an HMO in Birmingham – my usual broker can only find a deal where the interest is way too high or a better rate but will only do on repayment basis -will lose house to cash purchaser if dont find something else quick -any ideas gratefully received (I have a property portfolio of 13 buy to lets – this is my first HMO and it is already set up and licenced as such).
Thanks
Sue
Hello Matthew
I have ‘double-upper’ (maisonette) flats on the third and foruth floors of a tenement. The local fire brigade (Lothian & Borders) are insisting that sprinkler systems be installed…even though the usual level of HMO fore safety requirements have been installed. The sprinkler they say is required to meet the building regulations need for a ‘second means of escape’, from the upper level of the flat.
Have you ever heard of any other fire brigades making such stringent demands, and do yu have any advice on how to deal with them?
thanks
Kevin
Kevin, unfortunately some of this is down to interpretation. I suggest you do your own fire risk assessment. If after doing this, you deem the current arrangements to be adequate, then refute the proposals by the fire officers and ask to take this to the Residential Property Tribunal (or your equivalent in Scotland). best of luck! Matthew
ps sometimes the fire service do like to gold plate things so this is why you should do your own fire risk assessment
Hi Matthew
I am an investor who like many others cannot access funds to purchase the normal way, would you recommend to use a ‘Lease Option’ on a potential HMO project? How much money would you need to put in and what are the potential dangers of doing a ‘Lease Option’on a HMO?
Cheers
Andy
Hi Matthew
Am in the process of buying a 3 storey victorian terraced house for about £75k inc all fees.
I plan to put 2 bedrooms on the ground and first floor (i.e. 4 double bedrooms in total).. and have the kitchen /toilet in the basement.
A bulk standard HMO room in Derby gets about £55pw. If bills are £100 per person per month and the mortgage is £400 pcm this it not going to cashflow particularly well.. and may in fact just break even.
What strategies could I employ to make this more cashflow positive?
Thanks Matthew
Paul Bromnick
07970 572365
p.s. the main bathroom will be on the first floor…
Hello Andy, lease options can be a great way of getting a HMO. Main thing to avoid is one that needs to be licenced so speak to your council first! Other than that, the pitfalls are the same as any lease option so do your homework carefully and have a good solicitor.
Hello Paul, simple! You get us to manage it and we will achieve much higher rents for you (average of £350-380 pcm). I say this because our Derby operation is expanding rapidly and our houses are all ACCREDITED PLUS with Derby City Council.
Hi Matthew,
I have a couple of of HMOs with utilities such as gas and electricity included in the monthly rent. The tenants have the heating on all day and night, and open windows when it gets too hot. Can you recommend a good tamper-proof timer for the boiler to regulate central heating times? I use a combi Worcester 28i. A feature that will allow tenants to extend the settings by say 2hours at the touch of a button would be fine (allow some flexibility), but just not to have it running 24/7.
Greatly appreciate your ideas,
Ian
Hi Matthew
I’m exploring the HMO potential of a particular area in Bristol – I recall reading of a ‘deal analyzer’ on your webiste….but can’t find it anywhere……can you help?
Regards
George
Hi Matthew
You said
“However, what many landlords don’t realise is that after 6 months, it AUTOMATICALLY converts to a periodic tenancy which gives the tenant the same rights as a normal AST”
I’ve never heard this! Please be a little more specific as to which law you refer to.
Cheers
Bel
Hi Matthew,
What is your view on the latest announcement on 27th January 2010 by John Healey (Housing and Planning Minister) that he intends to introduce new local powers to control the spread of Houses in Multiple Occupation (HMOs).
HMO’s will be given their own Use Class and thus will need to obtain planning permission. Alot will depend on the new definition of HMO under planning which is due to come into effect in April 2010. If its 5 or more then we should be OK, if the government decides 2 or more make a HMO under planning, then we are up against it.
Hi Matthew,
At the Ramside presentation you mentioned that a free subscription to ‘Property Network Magazine’ is available on your website.
Could you advise where this is located. Thank you, Miles
Hi Matthew
I find your resources to right on the money exceptional don’t mind me saying so.Have a 6 bed HMO property in Liverpool currently looking to put the required fire doors,alarms,emergency lighting and other necessary safety requirements in place so everythink is in order. Thought you might be kind enough to maybe share if know any reputable companys who do similar services or maybe all in one package.Realise this going to be very expensive and not made of money ha but need to make everythink above board bit by bit.Any info be much appreciated.When is your next available workshop 2010 doing any northwest.
Kind Regards
Paul
Ian RE boilers, get it all on timers and then allow them to have an advance button OR put in a dimplex system to regulate the heat 24/7
George, I will email you the deal analyser one as its not on the site directly
Bel, RE the periodic tenancy, I am not sure of the exact law but its something that has been around for ever. I will investigate and write a blog on it.
Nav, RE the change of use in planning class and the new licencing laws, its utterly ridiculous! Go and make sure you join the NLA/RLA petitions and when I’m on BBC next, I will mention it!
Miles, RE Your Property network, you can access the guys website at
http://www.on2url.com/app/adtrack.asp?MerchantID=132486&AdID=464577
hi Paul, thanks for your comments! On fire safety, I only recommend Digitek, give Sam a call on 0116 2761162 and tell him I sent you. They don’t do fire doors but they do everything else and very reasonably!!
Hi Matthew,
My husband and i own a house (3 storey) and we are looking into converting it for multiple occupancy, i have had a read of your site and know i need a license. Is there any bible so to speak to take us through each step from conversion to letting?
kerrie
Hi Matthew,
Just wondering if you can give me some advice. I have a property which is currently occupied by two tenants who are friends. The council has now started to bill me for the council tax stating that as the property is occupied by two unrelated people it is now a ‘HMO’.
Every piece of legislation and law I can find states that to be a HMO a property must be occupied by two households made up of at least 3 individuals, but even after taking this proof and the relevant housing act sections to the council offices they are still saying the house is definately a HMO and I, as the landlord am now responsible for the council tax, is this correct?
Matthew,
I saw your talk at the London PIN which I thought was very informative. you mentioned you had a Fire Alarm company in Leicester you used for HMO’s can you give me their details. Thanks. Mike Frisby.
In response to the above question of HMO’s and council tax. I had the same issue, I then put the 2 people onto a single AST where they were jointly and severally liable and then my council tax dept were comfortable to charge the tenants the council tax rather than the landlord which they had previously done.
Hi, Matthew,
After London PIN, on 25th May I sent an email to Arthur Kemp at pin@hmotax.co.uk re: CA Tax relief, but have not had any response. i have also left several messages on 01733 248 706. Please let me know if there is any other way of contacting him.
Kerrie, the best advise is always to talk to your council and fire officers. In terms of a bible, not really but have a look at http://www.hmosecretsworkshop.com where we reveal everything you need from A to Z.
Josephine – do they pay an all-inclusive rent or rent plus bills? THis really dictates who pays the bills not the council. Have you ever heard of a person in a flat asking the landlord to pay the bill?!
Mike, please send me an email directly via the site. cheers Matthew
Hi Snezana, I will chase him but I know Arthur has been busy running around the country so this may be why!
Dear Mathew,
I’m having terrible trouble finding a decent BTL management company in Hull, East Yorkshire.
Please could you recommend a good company or give me advice on how to find one?
Many thanks in advance for you time with this.
Best wishes,
James
Hi Mathew
I really enjoyed your talk at the PIN meeting last night… and have already signed up for your 1 day course in London!
I wonder if you could clarify one thing for me. You stated during your talk that on rightmove that day you had found a 6 bed property in Bournemouth for (I think) £90k(?) When I queried this with you after your talk you said it came up when you entered “5 bed minimum in Bournemouth”.
As soon as I got back I went looking for this but apart from a very short term lease (5-6 years) on a hotel I can’t find anything like this deal. Would you do me a favour and check this again and if you can find the property you were refering to – send me the link.
Many thanks… Tony
PS. I look forward to seeing you again later this month
Matthew,
Many thanks for the information provided.
I have some questions for which I would appreciate your response:
1. In your opinion how much capital is required to set up a HMO business from scratch (ie assuming a 5 bed property with a property purchase price of 200k-250k) to cover costs such as deposits, professional fees, renovation, refurb, kit out, advertising for tenants etc
2. In your experience once operational how much time does it take to manage a “typical” HMO
3. The services and associated costs of working with yourselves to support me during and after purchase of my first HMO
I am happy to purchase the HMO Survival Guide, but it looks at though is was written in 2008… is there an updated version available?
I look forward to your reply.
Best regards
Simon
James, sorry but we are not in HULL yet otherwise I would recommend you get in touch with us. So, try and find one that is registered with a body like NALS, ARLA etc then pick the best one that offers best service. What is it your after exactly? We could provide leads for Hull but not viewing capability right now although I know a few guys in Hull that might be able to do this!
Tony, I looked on rightmove two hours before the event. It was on rightmove – it could have been the hotel but I think I had a quick look and it looked as though it was a normal resi property. Look forward to seeing you at the weekend.
Simon, 30% deposit plus buying costs plus about £15K per HMO. Takes about 1-2 hours max a week to manage. In terms of services etc, best thing to do is to come on the 1-day workshop (http://www.hmosecretsworkshop.com) or call the office on 01604 521305.
The 2008 HMO Survival Guide was written in December 08 so its still valid. The 90 day plan still works. Finance has changed as had planning law but we do cover this on the blog. Otherwise, you could come on the 1-day event because we give you part of the upgraded Survival Guide on the day as a free bonus.
Hi Matthew
My father and I are looking into the purchase of an HMO in South West London and trying to get an idea of our outgoing costs.
We have contacted a few management agents about managing the building for us but we don’t know what is a good rate in terms of their fee.
Please could you provide some advice!?
Thanks
hi Steph, the management fees will vary but budget for 12-15% + VAT plus around £150 per tenant found.
We know some good guys in Hayes, Hillingdon if you are in this area who may be able to help.
hope this helps
Matthew
Hi Matthew,
I have been looking through the articles and comments on your site but am still unsure where that leaves me in terms of my situation:
I own a 3 bedroom flat (1st floor) in Glasgow, where I currently live with 2 tenants. I am going abroad for a year or so and am going to let out the flat as a whole to one of the tenants. He is going to rent out the other two rooms while I am away to help with costs and bills etc. The flat has one main bathroom (toilet, basin, bath & shower), 1 en-suite bathroom (toilet, basin, shower) and a shared kitchen and lounge. The three bedrooms are all double rooms with large fitted cupboards. The question is would this be regarded as an HMO property? If I am renting the whole flat out to one person and then they sublet two rooms, I wasn’t sure if this would qualify…
Any advice would be much appreciated.
Many thanks,
Leigh
Leigh, best thing to do in this instance is speak with your council. Am aware in Scotland that any landlord requires a licence and you may need a HMO licence also.
Hi Matthew
Here’s a question for you.
I have just finished refurbishing a HMO in Yorkshire for a client and have managed to find him 4 professional tenants paying £95 inc all bills per week.
I personally cant get finance at the moment so what I was thinking was to RENT with a possible option to buy a similar property to the one I have refurbished and in a similar area and sub let each room to professionals or working people. To one family rent of £750/850 is asked for, however I believe I could get £1600 per month less running costs.
Have you come across this strategy before, what’s its downfalls and do you think it is financially viable?
I look forward to your reply.
Thanks
Andy
Hello Matthew i am a 17 year old who is intrested in getting into property. I am on £95 a week what can i do and where would i start ?
Andy, this is a great strategy and one of 3 creative strategies that we discuss on our HMO Secrets Workshop (http://www.hmosecretsworkshop.com).
You don’t need a lot of cash to invest in HMO’s (you will need some) and this is one that works all day long. Good luck with it!
Matthew
Ian,
You need to begin with a plan.
You don’t need a ton of cash to invest so the key thing right now is to begin by creating a plan for your investment goals, then setting down with a property expert to help you formulate this in more detail.
Good luck – I look forward to hearing positive things from you!
Hello!
I am thinking of letting a two-bedroom council estate flat (which I own on a leasehold) to 3 students, using the living room as another bedroom. There’s a big kitchen which I will use as a living area and the kitchen itself. How likely, do you think, is that I will need a planning permission for that?
And, in the light of latest changes in HMO regulations (April 2010), will I need any hmo-related licences if I let a council estate flat to tree people? The council is Southwark, London.
THank you!
hi Eugene, the best bet is always to contact your council. They will give you the latest guidelines. You shouldn’t need permission and you shouldn’t need a licence but I say that generically, it may be different in your part of London.
Hi Matthew
I live in Perth, Western Australia and have owned a HMO in Blackpool which has 6 flats. I just received a letter from the Prop Mger saying that the Fire Safety law changed in 2005 and we now have to have an independent assessor conduct a fire risk assessment to identify the fire precautions we need to put in place.
The charge for this is 100 pounds each flat – 600 pounds in total.
Seems very high although he tells me they give us 28 page report and takes them 1 day on site.??
Is this all so if so, do you know a cheaper option to comply?
I follow your site regularly and when I’m ready to purchase more properties I will definately be in touch with you first for advice.
Have a great day.
Regards,
Tony
Hi Matthew,
Interested in your HMO workshop, do u have a list of dates/locations ?
I live near London.
hi Tony, thanks for getting in contact. The thing I’m not clear on is your HMO a single building which has been converted into 6 seperate dwellings (ie studios with kitchenettes/bathrooms in) or are they flats that share a communal area?
If they meet the 1991 building regulations, then they will comply and will not be treated as a HMO – if they don’t, then yes you may need a Fire Risk Assessment.
The charge is quite high. This report would generally be done for one block (ie when we do a report its for a house with up to 8 units in) and it probably would take about a day in total including writing it up as it is a lengthy process. But I don’t think you need to have one done per unit so this may be your starting point in getting it done cheaper – locally we do them but for around £250 for a complete report. Hope this helps. If you have any investment monies available now, we can start building a 1, 3, 5 or 10 unit portfolio for you which will snowball in 10 years to around £1 million in EQUITY and c. £50K income (passive!)
hey Zeb, next dates will be in 2011 – will post them up here!
Hi Matthew,
I was wondering if you could help me. I recently order your HMO survival guide but the link got put into my junk folder and expired. After several attempts using the email address for any issues I have had no response and this is over 2 weeks now. Are you able to facilitate a new link being sent to me please.
Cheers
hey Demetris, I’ve had someone from the office email you to sort this out. tks Matthew
Hi Matthew,
any news on the course dates for 2011? Very keen to get started as soon as possible! Have had some good success letting basic properties but now want to take things a bit more seriously.
Great site BTW – very informative.
Regards,
John
Leicester
John, the calendar is going live soon – first workshop end of the month – sorry for the delay in responding.
Dear Matthew,
My father is looking to sell the property we live in, but since we have a HMO on this property, the estate agents are telling him to get rid of the HMO by releasing a few tenants (at least the two rooms which share common areas such as a kitchen or bathroom).
The house has 6 units (4 bedsits, 1 en suite bedsit and 1 self-contained flat). 2 of the bedsits we occupy, share one bathroom with 2 other tenants but have our own kitchen.
The rent from this property is my father’s only income and since I only just graduated and my mother is a housewife, it’s also our only family income. So if we get rid of two of the tenants (worth £750/month in rent) before we put the property on the market, we won’t have enough to live on.
This rule seems ridiculous since this is my father’s only property and only source of income. My parents want to sell this property, move back to their country of origin, India, buy me a smaller flat here, and invest the rest of the money is some mutual funds.
Please tell me if getting rid of the tenants is really the only option, in which case it wouldn’t be possible till I find a job and can look after the family for a few months. Of course we don’t know how long the sale of a house evaluated at £500,000 will take (what do you think, 6 months?)
Secondly, why is it that banks won’t lend mortgages on properties with a HMO? I mean say someone bought our property empty, they could fill it up with tenants straight away to earn some money. Isn’t that the same thing as buying the property with existing tenants? As far as the bank’s interest goes.
Sorry for the length, and I hope you can answer all my queries. Thanks for your time.
Hi Matthew,
Looking at the numbers a loft conversion (say £15k) in a terraced house would take an existing 2 floor non-licensable HMO to licensable status, but the additional rental incvome would pay for the costs. In your properties and expert opinion do you consider this cost and additional effort worthwhile or would you think it is better to put the £15lk spend towards the next HMO purchase? I have used £15 as an arbitrary figure but would you assume any different ‘average’ costs for loft conversions?
Many thanks
David
Hi again Matthew,
On the mortgage side due you go for a commercial buy to let mortgage for your properties or a standard buy to let loan. Some of the latter specify no students as tenants however in talking to people I get the impression some people ignore this condition, go ahead with the standard loan as it is cheaper and student let?
Regards
David
Hi Matthew,
I need your advice. I live in HMO. Originally there ware 3 tenants sharing on AST agreement in 2006. This agreement was renewed by all of us signing it again in 2007. But a year later our estate agents said he would prefer to leave it as periodic agreement to which we all agreed. After a few months my 2 housemates moved out and 2 other people moved in but we did not change names on agreement. Then I was out of work for a few months and we took 2 more people in (on verbal agreement that 2 weeks notice is to be given on boths sides)to be able to keep up with the rent and bills. Then one of the guys’ girlfriend moved in and we kept on living like this for 3 years. I am the only person whose name was on the original agreement, so I pay full rent and all bills and other guys contribute. Now this is my problem. 3 months ago one of the couples gave notice and I found a really nice couple to replace them. On the day of moving the couple who was to move out asked for an additional week and we let the newcomers stay for a week in our living room. Now the couple who was to move out changed their mind and decided to stay but by that time we argued and we do not want them to stay. We gave them a 2 week notice which is going to pass this coming Saturday, but they’re adamant they do not want to move out. They also started threatning us. Since then they went to estate agents and told them there is 7 people living in the house, and also informed the council there is 7 people living in the house (there are 3 names on council tax bill). What can we do in this situation? How can we get rid of these people? If we change the locks – will that be legal, as their names are not on the contract? Will I have any problems with council tax? The couple in question told be I will have tax problems because HMO houses are tax different to other houses – is this true? I can’t find any information on the net. Please advise as I am now quite desperate on what to do.
Hi Matthew,
in addition to my previous note, I have just realised that the couple put a lock on their bedroom door, which is a breach of my contract with the agency. What can I do to get rid of them? I don’t mind moving but I have to give the property back without any occupants.
Please help.
Hi Matthew,
I have a 6 B2L HMO properties, but am getting frustrated by my rate of growth, adding one property a yr to the portfolio. The reason for this is it takes me a yr to get the minimum 20% deposit to get a B2L morgage. I have great demand for my properties and know I could fill more but I can’t seem to get around finding such large somes of money to invest further. I don’t want to currently remorgage my existing properties as the rates I am paying at the moment are very low £200-300 per house. I have been to several morgage brokers and they agree that it would be foolish to take money out the exiting properties at the current time.
Have you any suggestions how I can move forward? I would typically like to buy 3-4 properties this yr. I have tried to do BMV deals without much success, although again the broker advises if we can get 20% off the asking price we wouldn’t be able to remorgage for 6mths and get our deposit out so we still have to find the money in the 1st place.
I have had the suggstion that banks outside the typical highstreet lenders are more accommodating and more willing to lend. However don’t know of any such lenders.
Please help!!
I am frustrated as I seem to keep going around in circles!!
Jamie
Hi Matthew
I understand the concept of HMOs in it’s simplest terms ie. each tenant has his / her own room with shared bathroom and kitchen facility
However, I have noted that some landlords have taken a “step up” and have converted letting rooms into studios ie each room includes a small kitchen area and a shower room (although there could be a shared bathroom)
In your opinion is there a significant extra return from this type of HMO to warrant the extra expense……..notwithstanding that letting rooms would need to be somewhat bigger anyway, hence a bigger property would be needed for the same number of tenants
Also, what is the minimum size room you would expect to see for a standard HMO letting room?
Thanks, Peter
Hi Matthew
Great section! 3 quick questions
1.Do you know who is offering 70% LTV for HMO’s?
My brokers can only offer me 60%
2. Are there investors interested only in HMO’s?
I am looking for £92k for 9 months at 10% return
3. Where do you advise buying furniture packs
Thank you for your help, I hope to meet you soon
Francis
Hi Matthew,
I am new to this blog but need your advice as follows:
I own and rent a property in Yorkshire. My original tenant, a couple on a AST and claiming housing benefit split-up and one of the tenants left the property. The remaining tenant asked me if his parents to move in and rent the property with him. The parents were on housing benefit at another property and they checked with the LA that they could do this. The LA confirmed that this would be fine but they needed to provide tenancy agreements. The tenants and I checked independently with the council that this would not require the property to be defined as a HMO – though nothing was confirmed in writing [remiss of me].
I gave the tenants two seperate AST agreements, both stating that they are responsible for all bills and utility costs. The LA accepted these agreements and paid the council tax and council tax for the tenants for some 14 months.
However the single tenant obtained a temporary job over Xmas and as such all housing benefits ceased. He didn’t tell me or notify the LA. As a consequence he did not pay me the rent and received a council tax bill for the period that he was in work. Once the job finished he again claimed housing benefit and all went back to normal. However the LA then determined that the property was a HMO and have sent me the council tax bills for the 14 months [plus this years 2011/12].
After further investigation I discover that if the property is determined a HMO the LA may have the legal right to recover all rents paid, all council tax, and I may be liabel to a fine up to £20k! As you can imagine I am now having sleepless nights!
My questions are:
1. Is the property a HMO or not? [Related tenants with separate AST]?
2. What is my council tax liability?
3. Can the LA reclaim the rent paid from me?
4. Am I likely to receive a fine?
5. Moving forward [and with hindsight] would it have better to have used a single AST [single household] and if so how would this have affected [or affect moving forward] the housing benefits of the tenants?
I would really appreciate your urgent advice.
Regards… Adrian
Francis, commercial finance can in some cases go to 70% but generally we are seeing 60% LTV’s at the moment but on yield – not bricks and mortar.
You should go to networking events to get finance.
We supply our own real-wooden furniture, just email us for a quote and we will send you details through.
hi Adrian, sorry for delay.
OK any property where two or more unrelated households are sharing is a HMO. As the sharers are all related, it is NOT a HMO.
However, they do have seperate AST’s which from the LHA point of view – may make it a HMO (they have different classifications).
Council tax lies with the tenant if this is stated in the contract.
Yes LA can reclaim rent if they can prove that the rent is reclaimable – this is something that need further investigation.
No, you won’t get a fine as its not a HMO.
Yes use a single AST for a single household – you should have made amendment to original ast or drawn up new one to have them all on as wholly liable.
Hi there,
I hope you’re well.
Am I right in understanding that EVERY HMO needs to be managed but only certain ones need to be licensed (3 floors and more than 5 people).
I would really welcome some clear expert advice on what needs to be managed and what needs to be licenced!!
Regards,
Alex
Hi Matthew,
I have a query that I hope you can answer, my son was renting a HMO property in Dundee, he was working part time and was sharing with 2 full time students, I have been in touch with the LA regarding council tax and they have said that the landlord is responsible for this. The cost of the council tax was not included by the landlord in with the rent. He has been unable to provide me with a copy of the council tax bill for the year and when I pushed him he said that he had a bill but it was showing zero. Could you advise if the 3 tenants are liable for the council tax or are the 2 students exempt completely and the part time worker has to foot the bill.
Your advice will be greatly appreciated.
Many Thanks
Linda
Hi Matthew,
It seems HMO status can drastically reduce the price that potential buyers are willing to pay. In my case the price reduction is around 40%.
This apparently results from the limitations which Councils impose on development plans.
As you can probably imagine, I am not a fan of HMO legislation.
Is there any way of getting HMO status revoked in order to overcome this problem?
Thanks.
Dennis
Hi Matthew,
I am really keen to get started in HMO investment. I have seen some properties and want to make sure I have got the basics right.
I am in London and looking for HMO’s in my surrounding nearby towns. Some houses I have come across to, are adjacent to shops or in one example next to a taxi cab company. Should such properties be considered?
How do I invest in HMO’s outside London (as these definitely provide a much higher cashflow yield) – given that I wont be able to manage them as they will be beyond my reach ?
Look forward to your reply.
Kindest Regards,
Abbas
please send details of real wood furniture packs supplied by your company
Rajesh Sharma
Hello Matthew,
I am a student living an an HMO (8 tenants). We have all signed individual contracts and each of us has a guarantor.
I am expected going into my last year of university and unfortunately, I did not pass my exams and will not get any finance to pay the rest of my contract. Now, I have found a tenant that can replace me. So I am aware that there is a possibility than the action of ‘deed of assignment’ can take place. However, do the other tenants in the property HAVE to approve of the new tenant, or is it more important that the landlord is to be paid?
I hope you get back to me soon.
Kindest regards.
Hi Matthew,
I have been asked to find a buyer for a colleagues HMO and I am not sure where to start. I have sold BTL property before but never a HMO. Where should I start? I dont really have clients or contacts who would buy this sort of investment so probably need to throw the net a bit further.
Many thanks,
Martin
Hi,
I am considering letting my 4 bedroom detached house (standard not three storeys) out to 5 professionals. There is one couple and 4 friends.
Two reception rooms downstairs and seperate kitchen. 4 bedrooms upstairs.
Do I need a HMO license ?
Thanks
Gareth
Gareth – this depends on the area!! You need to talk to your council to find out – generally it would not be but speak to your council! Where is it?
Martin, we can source for you if you wish – its a complex area but you need to understand the Housing Act 2004 and the Amenity Guidelines in each area you are sourcing. Hope this helps.
Think as long as landlord gets his money you should be fine!!
Hi Matthew
Basically I need help. I have a 3 storey property that I used as 3 flats but the conversion does not meet building regs. The council came round in 2004 and classed it as 3 self cont flats for council tax purposes. this was rented out to 3 separate families each with their own council tax. In 2005 housing enforcement told me I had to bring it up to standard and licence it as a HMO and I did. However council tax continued to be charged as 3 flats. In 2009 flat 3 was rented out to a brother and sister and council tax declared it a hmo even no further adaptions on the basis they used it as bedsits. I did not authorise this and I got charged the council tax for flat 3 only and tenants for the other paid their council tax. In 2009 I asked why I was being charged as 3 flats when the house was a hmo. Nothing changed and they gave no viable reason. In September 2011 I had enough of the council so I decided that I would rent it as a single unit to one family. I arranged the tenancy agreement but now the council are saying it is still 3 flats and continue to charge. I have told them there is no building regs and no planning permission for conversion to flats but they still argue. I have no told them that they are going to make the current tenant homeless if this is not resolved. They have told the tenant that they are now liable for the council tax for all 3 flats. I explained that they cannot be liable but they dont want to listen so now I want to sell but wont be able to sell as 3 flats can you advise if they are acting within the law.
Thanks
Colin
Colin, it would appear to me that the valuation department have incorrectly valued it as 3 flats (which is perhaps what is was) but in 2005, you changed it to a HMO. You should have then at this point gone back to argue the point. If they are bedsits and self-contained, its hard to argue this point though!
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