Plan Insurance Blog

Houses in Multiple Occupation – Should You Be Offering Flat Shares?

It’s been reported in The Times that strict council rules are almost making house shares a thing of the past. Groups of individuals looking for a home to share are finding the tasks incredibly challenging.

Many councils are extending houses in multiple occupation (HMO) rules to include more rental homes. Therefore a number of landlords are refusing potential sharers in order to avoid the potential additional costs required to ensure their properties comply and greater administration burden.

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Are you saying no to houses in multiple occupation (HMO)?

National legislation stipulates that landlords renting to five or more sharers that are not related should hold a HMO licence. The licence will specify additional standards. Local councils can reduce the requirement to three or more occupants as well as increase the requirements. In recent years more councils have been doing so.

Consequentially homes that would be suitable for sharers are leaving the rental market at fast pace. Data from debt advisory specialists Sirius Property Finance found there were over twelve thousand less HMOs available in England in 2021/22 than the prior year.

The East Midlands over a quarter of its HMO stock in the same period. In the northeast 16% of HMO properties were removed from the market. Only 2% of the nation’s housing stock is now classed as HMO.

The Times states that tighter requirements may include; “installation of smoke, fire and carbon monoxide alarms; repairs and maintenance; waste disposal; tenancy management; and antisocial behaviour issues by tenants.”

The benefit to many landlords, in the form of higher rents, no longer offsets the greater investment in admin time and severe escalation of work costs and licensing fees. With councils regularly shifting the goal posts, there is also the threat of further upgrades being need to maintain a property’s eligibility for three or more sharers.

It’s also claimed that landlords are breaching HMO requirements by “turning a blind eye” to homes rented to more sharers than is permitted by their licence. The article suggests landlords are doing so to avoid additional admin.

Given the cost of living crisis and the already limited amount of rental stock available in the market it seems absurd that councils would act to further restrict numbers. However the data clearly supports the fact that flat shares for friends are increasingly difficult to find. The law of supply and demand should prove landlords that invest the time to comply with HMO licensing requirements will find their property achieve a significant premium, whilst still reducing overheads for the tenants who would otherwise have to rent a greater number smaller units at a less efficient rate per head.

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