Getting to Grips with HMO Licencing

Are you a landlord looking to understand HMO licencing better? Here’s everything you need to know. 

If you’re thinking about renting your property to 3 or more tenants who aren’t related to one another, then you’re going to need an HMO licence. But what is it? Why does it matter? And what are your responsibilities? Let’s dig a little deeper.

So, What is an HMO?

HMO stands for House in Multiple Occupation. 

According to GOV.UK, an HMO is any residential property rented by at least 3 people who aren’t from the same household (for example, a family) but who share facilities such as a toilet, bathroom, and kitchen. It’s also known as a “house share”.

Letting your property as an HMO is subject to strict conditions. These include:

• The property can’t be occupied as an HMO without a licence. Even if you have an application pending and it’s likely to be accepted, letting as an HMO without the correct paperwork will land you in hot water. The maximum penalty for doing so in Scotland is a fine of £50,000 upon conviction.
• The licence is issued by the local council in which the property is situated. The licence is typically valid for 5 years, but this can vary from one council to another. It may be issued for a shorter period if there are concerns over how the HMO property will impact neighbours.
• The council has the right to assess your property for potential risks. If you fail to comply with safety regulations, you could face criminal prosecution. It’s therefore vital that you ensure your property is safe and compliant before renting it as an HMO.
• The number of tenants. By law, you can only rent your property to as many people as stated on your licence. This is checked before your licence is issued. Assessors will inspect your property to see how many people can comfortably live there. If you exceed the number of tenants on your licence, you could face a hefty fine. 

HMO Licencing: Landlord Responsibilities

As a landlord of an HMO, the buck stops with you when it comes to managing and maintaining the property and keeping your tenants safe. To stay on the right side of the law, you must:

• Be a registered landlord
• Keep important certificates up-to-date
• Undertake quarterly inspections and fire training
• Fit smoke alarms on every level
• Keep fire escapes clear from obstruction
• Ensure upkeep of communal areas
• Make sure waste disposal facilities are in place

What Are the Benefits of an HMO?

While the rules and responsibilities of renting out an HMO can be overwhelming, the benefits more than make up for it. HMOs can produce far higher rental yields than your typical buy-to-let property, and the demand for shared housing is fairly constant, no matter the economic backdrop. 

Plus, you can always pass those responsibilities onto a property management company (like Cairn) if you’d rather take a back seat. 

Interested in letting an HMO property? Here at Cairn, we offer a variety of HMO Development and HMO Property Management services. Get in touch to find out more.