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Daniel Booth · 26-08-2012, 10:46 PM

Hi All,

Just an idea, would like for you guys to pull it apart;

I've got an opportunity to take a lease on a 10 bed Guest House very cheap.

It's in an area where there is a massive shortage of housing for LHA tenants and provides good quality accomodation.

Could I let the rooms to LHA tenants?
What pitfalls could there be?

Dave Reaney · 27-08-2012, 12:25 AM

(26-08-2012 10:46 PM)daniel_booth Wrote: What pitfalls could there be?

HMO planning permission?
Possible requirement for HMO license?
Would the kitchen facilities be sufficient for individuals preparing their own food?
If the rooms are not en-suite, are there sufficient bathing/toilet facilities?

Daniel Booth · 27-08-2012, 12:40 AM

(27-08-2012 12:25 AM)djr Wrote:
(26-08-2012 10:46 PM)daniel_booth Wrote: What pitfalls could there be?
HMO planning permission?
Possible requirement for HMO license?
Would the kitchen facilities be sufficient for individuals preparing their own food?
If the rooms are not en-suite, are there sufficient bathing/toilet facilities?

Thanks Dave,

Similar thoughts to what I've had, however as a Licensed guesthouse, the fire regs and kitchen/bathroom I would think would be higher/as high spec as HMO standard.

Re planning, I appreciate it may be change of use, however can a hotel not let a room out for 6 months without changing use?

Jonathan Clarke · 27-08-2012, 12:41 AM

(26-08-2012 10:46 PM)daniel_booth Wrote: Hi All,

Just an idea, would like for you guys to pull it apart;

I've got an opportunity to take a lease on a 10 bed Guest House very cheap.

It's in an area where there is a massive shortage of housing for LHA tenants and provides good quality accomodation.

Could I let the rooms to LHA tenants?
What pitfalls could there be?

LHA is not payable for temporary B&B accommodation.
If you intend it to become permanent then it becomes an HMO and no need to provide breakfast at extra expense to yourself.
You could possibly use it as emergency B&B for homeless sent to you by the council for a period of 6 weeks before they are rehoused. You wouldnt get LHA but there would be an agreed rate which may be attractive. If the turnover was constant and occupancy high that may be lucrative if you are prepared to accept all and sundry at all hours of the day and night.

Daniel Booth · 27-08-2012, 12:44 AM

[/quote]
LHA is not payable for temporary B&B accommodation.
[/quote]

Thanks Jonathan,

I guess what i need to understand - does B&B accomodation HAVE to be temporary, can I not let a room to someone for 6 months?

Jonathan Clarke · 27-08-2012, 12:56 AM

LHA is not payable for temporary B&B accommodation.
[/quote]

Thanks Jonathan,

I guess what i need to understand - does B&B accomodation HAVE to be temporary, can I not let a room to someone for 6 months?
[/quote]

I guess you could do it for 6mths as some rock stars live permanently in hotels so if someone can afford it why not live in a B&B for 6 mths. But private not LHA. Different rules would apply as B&B is seen to be a temporary stopping place not a 6 mths stay. LHA will definitely not pay for the breakfast element and all the other extras you get in B&B like fresh linen etc ( unless emergency) so surely you wouldnt want to incur that extra expense so not sure why you would want to do it as a B&B and not just a normal HMO

Dave Reaney · 27-08-2012, 09:41 AM

I guess the key question is - will you operate it as a B&B or a HMO?

Clean bedding? Food? Room cleaning?

If those are all provided, it remains a B&B or you could concievably operate on a license basis.
If only breakfast is provided, you'd need to organise communal cooking facilities.
If you're going to do that, you may as well go down the traditional HMO route as (in addition to the no LHA for B&B mentioned above) LHA would only pay for the accommodation aspect, not the food.

Lynne Davis · 27-08-2012, 11:12 AM

Assuming that you're going down the HMO route rather than the emergency accommodation / B&B route, how are you going to handle bills? LHA doesn't include bills so you'd have to either make tenants responsible for their own (coin meter in every room?) or take an additional payment on top of LHA to cover bills. How do other LHA HMO landlords handle this?

Other options to consider might be a women's refuge, halfway house for teenagers leaving care or recently-released prisoners, or supported living environment for adults with learning difficulties. Don't know much about these (I just saw a play recently about a women's refuge so that's what brought the possibility to mind) but could be worth discussing with the council.

John Corey · 29-08-2012, 02:16 PM

Daniel,

Are you buying for cash or on terms where you do not need to finance the property?

Assuming you will need external finance, you better match up what the lenders will do with the property type. If you think B&B and the lenders only do HMO you could be stuffed.

Check closely the fire regs and other things. Two reasons. They might be the same or the different use could have a big impact. Second, if you do change the use, you might need to upgrade the facility to current standards while not having to do so if there is no change.

Daniel Booth · 29-08-2012, 04:35 PM

Thank you all for the replies;

To answer the various questions;

I guess you could do it for 6mths as some rock stars live permanently in hotels ,not sure why you would want to do it as a B&B and not just a normal HMO
The rock star thing illustrates my point well, I'm suggesting that basically operate as an HMO (so not providing food/bedding etc.), but without having to go through change of use

how are you going to handle bills? Coin meters

Check closely the fire regs and other things. Will do if change of use is required

Are you buying for cash or on terms where you do not need to finance the property? No borrowing involved, can buy the lease for 5k ingoing, so just rent to the freehold owner

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