Hi - I would like some advice please from the font of knowledge that is the Property Tribes Community!

I have a portfolio with single-lets and I now want to add some HMOs into the mix.

I'd be grateful if anyone would be able to give me their views on the main 'do's' and 'don'ts' of HMOs.

In other words the "Do's" are the 'If nothing else you must do these top 5 things'...; and the "Don'ts" are the 'you need to be mindful of / or avoid these things otherwise you'll be in trouble!'.

Thanks for your help.

Jamie

Make a decision between 'joint tenancies' and individual tenancies.

The former generate less rent but are simpler

For the latter you need to bear in mind that you will be liable for council tax, liable for (most) damage in communal areas and you need to work out a fair and practical way to deal with utilities.

Again, with the latter, you are ultimately responsible for the cleanliness of all communal areas too.

Hi Jamie,

I would suggest that a good place to start is talking to your local Housing Officer about what constitutes an HMO in your area and what regulations etc. you will need to adhere to.

There is also a book called "Renting HMO's Sussed" by Ben Reeve Lewis and HMOLandlady that I am sure will be very insightful.

There are a couple of "gurus" on the wealth creation circuit who claim to be experts, but I would be wary of them because when I heard them speak it was focussed on making as much money as possible while doing as little as possible for their tenants.

HMO's are serious entities and need to be treated as a business and with a commercial mindset, but not at the expense of tenant's welfare and wellbeing.

Speaking as one who mediates in landlord and tenant disputes I can tell you the biggest cause of headaches I see in this area. It is……..

"Hands off management."

Landlords sticking a disparate group of people, often with a range of social problems in a single house and just chucking in the gas card and electricity key meter and leaving them to get on with it. Allowing the group to form cliques and alliances, alpha male dominators and argue about who uses more electricity than the others.

House visitors can also exacerbate problems with different friends and partners rubbing up against each other. Bear ion mind that if there are 5 people in a house you may well potentially have at least 10 people who are probably going to be part of the overall mix.

I firmly believe that you cant run an multiple shared house efficiently or happily like a standard kind of tenancy. That is why HMO landlady is so great at what she does, she understands this and manages accordingly. Her book (and it is her book, I only wrote 1 chapter on law) gives you all the real life practicalities you need to know.

Of course it doesn’t prevent all problems, you never will in an HMO but she is at least on top of it. I don’t think everyone is suited to running HMOs. I know I wouldn’t be, I lack the patience.

The other point, as has already been raised is check with the local authority for the district is in what they count as an HMO and what their requirements are. As stupid as it is, although the definitions reside in statutes you will find that hardly any 2 local authorities seem to agree on the finer points. If you have 2 HMOs in 2 different boroughs check with both.

For instance my recollection of the official view is that an annexe counts as one of the floors if it is joined to the main building by stairs but when I checked with my local authority they pooh pooed the idea, taking the view that an annexe only counts if the mains are supplied from the main building. Its that kind of official nonsense you have to get to grips with.

Thank you for a fantastic contribution Ben.

You are so write that tenants are in fact people and come with associated issues and problems that can manifest in a single occupancy house, but, more likely in a shared house where disparate people are brought together.

As I mentioned in another post, the wealth creation experts rarely mention tenants when talking about creating wealth from other people's money (i.e. the bank and the tenants!).

Property is a people business and unless you are willing to understand people and manage them in a formal and legal structure, I would suggest that property is not for people prepared to do that.

Further reading:

Top 5 things most under-rated by Landlords

Tenants are people, not a rent payment

Having had limited experience of multilets, I have come across tenants with mental illness, a tenant who brought her drunk and aggressive boyfriend into the house, and a tenant who couldn't cope with being away from home and had a nervous breakdown.

And this leads back to how important it is to vet tenants, which is another topic altogether.

The ultimate way to vet a tenant.

Landlords have huge responsiblities. It's not simply a case of shoving a few people into a house and collecting the rent to make you a millionaire. It's complex and only for those who are committed to serving the needs of their clients (tenants) and dealing with human foibles.

Spot on. It's that key bit of thinking that determines the kinds of experience a landlords will have. Its not about property but people, and all people will bring strange problems with them, none more so than in your average shared HMO.

When I was younger I lived in a shared house in a housing coop of like minded people which was tremendous fun (when your main concerns in life are clubbing rather than a good night's sleep ) but could be a real headache too. Whenever a vacancy came up everyone was nervous because although we interviewed and picked out own replacements all it took was one wrong choice to completely upset the balance of happiness in the house, and in 5 years that happened a lot. Often it wasnt so much the person you [picked but the friends they brought home who also had to become part of the house.

For the HMO landlords I assist their main frustrations arent so much with rent arrears but the spin-off problems from caused by personality clashes

(16-09-2012 08:45 PM)djr Wrote:  Make a decision between 'joint tenancies' and individual tenancies.

The former generate less rent but are simpler

For the latter you need to bear in mind that you will be liable for council tax, liable for (most) damage in communal areas and you need to work out a fair and practical way to deal with utilities.

Again, with the latter, you are ultimately responsible for the cleanliness of all communal areas too.

Thanks Dave - good tip.

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(17-09-2012 09:06 AM)vanessa warwick Wrote:  Hi Jamie,

I would suggest that a good place to start is talking to your local Housing Officer about what constitutes an HMO in your area and what regulations etc. you will need to adhere to.

There is also a book called "Renting HMO's Sussed" by Ben Reeve Lewis and HMOLandlady that I am sure will be very insightful.

There are a couple of "gurus" on the wealth creation circuit who claim to be experts, but I would be wary of them because when I heard them speak it was focussed on making as much money as possible while doing as little as possible for their tenants.

HMO's are serious entities and need to be treated as a business and with a commercial mindset, but not at the expense of tenant's welfare and wellbeing.

Hi Vanessa - yes, I completely agree with you regarding the 'experts' on the speaking circuit. I have heard many focus all their talk on the cash-flow & net profitability of HMOs versus single-lets, rather than on any of the practical issues and responsibilities that any HMO landlord needs to be aware of.
Thanks,
Jamie

This is the 2nd time I've written the reply so my original may miraculously crop up or has been forever lost in the depths of my iPad. Here's my advice:

DON'Ts

1. Don't take the first person who comes knocking off the door, carrier bag in hand and a hopeful look in their eye
2. Don't judge your tenants - taking a room in a shared house is rarely their preferred choice of accommodation
3. Don't leave problems to sort themselves out. You chose each tenant, you need to mediate
4. Don't leave a long time between house visits
5. Don't think that putting a party animal and a mature/retired person in the house and leaving them to get on with it is an easy option -ask any parent willing their 25 year old to leave home.

DO's

1. Do get s completed Tenant Information Form - you'll need to know how to contact their mummy when they go AWOL and the police will want to know who to contact when they find the body
2. Do think for your tenant - they won't know how to change a lightbulb or a vacuum cleaner bag
3. Do employ a cleaner for the communal area -saves stress all round
4. Do keep your sense of humour and your mind open, especially when excuses for non payment of rent come out
5. Do have a good working relationship with your tenant - they are your eyes and ears inside the house

These points are not meant to be flippant. Being an HMO landlord means being a social worker, detective, rent collector, citizens advice bureau and counsellor. It's not a passive let and is only suited to those who enjoy working with people 24/7 and aren't easily shocked!

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Oh, and another thing: please don't pay to go on a course run by so-called experts promising high yields if you invest in whatever they have to offer. Subscribe to my blog at hmolandlady.wordpress.com for free advice or give the money to the Salvation Army, Centrepoint or other charity tackling homelessness.

@HMOLandlady

Fantastic post, thank you!!

I think it highlights the fact that, like any business, if you are willing to get your hands dirty (metaphorically speaking), then the rewards are there.

But to use the word "passive" in the context of HMO's is incorrect.

As you said, they are people, and you have to deal with them, communicate, solve problems, etc ... not just sit back and collect the rent.

All of the above I do think having a good relationship with your local HMO department is essential having them on your side . HMO landlady says it as it is which I find refreshingly honest I am looking forward to reading her book . Patience of a saint essential also Property Tribes a great place to learn .

Kim Stones.

http://Www.kimstones.co.uk HMO Rent to Rent Course Saturday 20th October call 0800 6335 333 to book places