Let’s imagine this. You’ve bought an HMO, spent a ton of money on the refurbishment and very excited to get your first tenant in.
But you soon learn you didn’t get an HMO License.
Or don’t have a building control certificate or the fire assessment wasn’t thorough enough.
This is the point you wish you had a comprehensive HMO compliance checklist to guide you.
Neglecting HMO regulations can be bad for your investment plans and even turn your investment into a liability.
HMO regulations help keep your tenants safe, put you on the council’s good side and help you sleep better at night.
Not to mention save you money from having to redo any renovation work.
I’ve put together this comprehensive HMO compliance checklist to help you navigate the HMO compliance process step-by-step.
This HMO Compliance checklist will cover the 3 main pillars of HMO compliance.
Planning, Building Regulations and Licensing, with subcategories for each.
I’ll also add some BONUS items to the checklist to encourage you to go above and beyond for your tenants.
So grab your tea, cardboard and read on.
1. Check If You Need HMO Planning Permission
I’ve seen a lot of investors underestimate the complexity or ignore the HMO planning process.
Only for it to come back later and haunt them.
The local authority is very strict about protecting the safety of the occupants in an HMO and the impact of HMOs on the local area.
If you don’t know what is Article 4, it’s the Council removing Permitted Development rights within an area.
If there are 3–6 occupants, you can convert the property from Class C3 (single let) to C4 (HMO) using Permitted Development.
It’s also recommended to get a Lawful Development Certificate.
This acts as evidence that you carried out a conversion via Permitted Development.
And it not only helps with a mortgage application but also as insurance, should the council enforce Article 4.
If there are more than 6 occupants, you’ll need to get planning permission for your HMO conversion regardless.
Alternately if there is an Article 4 restriction in the area, you’ll need to get HMO Planning Permission.
If you do not get planning permission the Council may allow retrospective planning.
If unsuccessful, the Local Authority may issue an enforcement notice to put the property back to the condition it was.
They may even prosecute you in a court of law if you fail to comply.
Key Takeaway — Check whether you need HMO Planning Permission. This depends on the number of occupants in the property, use class and Article 4 restrictions in the area. The key deliverable, in this case, is a Planning Decision Notice.
2. Check If You Need Building Control
The next item in your HMO compliance checklist is Building Control.
Building Control or Building regulation is the formal approval from the Government or Local Authority permitting the construction or change or property in certain ways.
The standard building regulations for HMOs apply for up to 6 occupants.
This includes complying with HMO Fire Regulations.
Which in turn means doing a fire assessment, using smoke detectors, fire detection alarm systems.
It also involves installing HMO Fire doors where necessary (kitchen, living room, bedrooms).
You’ll also need to ensure to meet the HMO Kitchen Requirements.
For example room size, cooker, extractor fans, sink and so on.
For larger HMOs, you’ll also need to do sound quality testing to meets acoustics requirements.
Satisfactory acoustic compliance and good sound insulation are necessary.
Imagine if you heard every word your neighbour said, it would not be a pleasant living experience.
It’s important to consider this during the HMO development process to ensure a smooth building regulation sign off.
In case of any structural alternations to the building, you’ll need to hire a structural engineer.
One that can ensure the work is done to the highest quality.
You’ll also need to ensure correct ventilation in bathrooms and common areas — both mechanical or natural ventilation.
If you have questions or need advice on your specific case, our team will be more than happy to help you.
Key Takeaway — Check whether you need building regulations and appoint a competent firm to guide you through the process. The key deliverable, in this case, is a Building Completion Certificate issued by the Building Control Company.
3. Get An HMO Licence
No matter what people say, it’s important to know how HMO licensing regulation works.
So much so that I wrote an entire article on — do I need a HMO licence?
In a nutshell, if there are 3–4 unrelated occupants living in the property, “selective” licencing applies.
This means it’s completely at the Council’s discretion to enforce an HMO licence.
If you have 5 or more occupants, “mandatory” licencing applies. This means you must get an HMO licence.
Depending on the area and complexity of your HMO, the licence cost can vary from £400 in a small town to £1,500 in a large city.
An HMO licence is generally valid for 5 years.
As an HMO investor and architect, I advise you to get an HMO licence as it provides complete peace of mind.
It also gives your tenants confidence that you’re a high-quality landlord that takes the regulations seriously.
If you need any help in HMO Licensing please reach out to our team at HMO Architect and we’ll be glad to help you.
It is really important to note that an HMO License is not transferable from a Landlord to another.
So in case you are buying an HMO from another investor, regardless of whether an HMO License was in place or not, you will need to apply for a brand new one under your name.
Key Takeaway — Apply for HMO licensing based on the number of occupants. It’s advised to get an HMO license and stay compliant. The key deliverable, in this case, is an HMO Licence document issued by the Local Authority.
BONUS Items For HMO Compliance Checklist
As promised here are some BONUS items for your HMO Compliance Checklist.
Not so much compliance but rather good practices we’ve learnt from over 15 years of buying and renting HMOs.
BONUS 1 (HMO Compliance Checklist)—Certificates
One of the top things I’ve learnt from investing in property and speaking to 100s of investors is how important paperwork is.
Although trivial, it helps maintain a smooth transition from one stage to another and reduces hiccups in the process.
Having the correct certificates also shows the Local Authority that you’re a professional and serious investor.
And that you care about the wellbeing of your tenants.
Here are some of the Top Certificates or paperwork that you need
- Planning Decision Notice
- Certificate of Lawfulness for Permitted Development
- Building Regulation Completion Certificate
- HMO Licence
- Gas Safety Certificate
- Electrical Installation Certificate
- Energy Power Certificate (EPC)
- Fire Detection and Alarm System Installation and Test Certificate
BONUS 2 (HMO Compliance Checklist)— Do The Numbers Work?
This is your first step as an HMO investor and one of the most important points on your HMO compliance checklist.
Make sure your numbers work, there’s enough budget for refurb, planning, building regulations, licensing and you have many exit strategies.
Also, plan for delays and the financial impact on any borrowing like bridging finance or investors.
Our HMO Conversion guide gives a holistic view of what to consider when deciding whether to convert a property to an HMO.
BONUS 3 (HMO Compliance Checklist)— Qualify Demand
Tenants are the blood of your HMO and your source of cash flow.
Your ability to find and vet tenants is one of the skills you’ll develop as an HMO investor and one to pay attention to.
It’s recommended to define your ideal tenant even before you buy the property.
This also depends on the area for example a factory, warehouse or airport worker, professional employee, student etc.
Before you buy the property it’s good practice to put a dummy ad on SpareRoom, Badi or Gumtree
Then test for demand by assessing the responses based on the tenant profile you’ve defined.
Also, speak to HMO management companies to help you find and vet tenants.
You can set expectations and contracts for them to manage your properties within the local area.
Try to get a recommendation and do your due diligence before working with anyone.
Lastly, don’t forget to have an HMO tenancy agreement in place before any tenants move in.
BONUS 4 (HMO Compliance Checklist)— Interior Design & Marketing
Having high-quality marketing material to show off your HMO will attract quality tenants.
We live in an age where content marketing is critical to a business’s survival.
You’re up against companies who spend a ton of resources staging properties.
The Covid 19 Pandemic has also opened up new avenues of video and remote viewings.
Some ideas can be getting a 3D Virtual Tour or 3D model of your property made just before completion with the right furniture.
Here’s an example 3D Virtual Tour for one of our properties.
Other options can be a CGI (computer-generated image) of the property or room quality during the concept phase.
All these can help you stand out against other low-quality rooms that attract highly price-sensitive tenants.
After all, we’re in this for the long term and quality tenants who pay for quality rooms are the way to stay sustainable and have a low turnover.
BONUS 5 (HMO Compliance Checklist) — Get Insured
Murphy’s Law states
“Anything that can go wrong will go wrong”
In your journey and career as an HMO investor, many things can and will go wrong.
Can be anything from non paying tenants to midnight boiler emergencies, damage or God forbid even a fire.
Getting the right insurance that covers all or most of this will give you complete peace of mind.
Yes, it will reduce net positive cash flow but it’s so worth it.
If you’d like to speak to an HMO insurance broker, we’d be happy to recommend a few and connect you.
I hope this HMO compliance checklist gave you guidance on how to ensure your HMO is compliant before you rent it out.
Understand the importance of HMO planning, building and licencing and when you need them during the process.
This should generally help you complete the project on time and hopefully on budget.
We also went through some bonus points to get your HMO ready to a high standard.
If you’d like to talk to an architect, we’ve advised many HMO landlords as their trusted advisors through the entire process on many projects.
So please get in touch. We’d love to help you.