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  • HMO & Multi-Lets

    Live in landlord in HMO

    I am in the process of accepting a new position in London. I have one BTL and have been looking recently at purchasing another one or two ( I’ve been abroad the last couple of years).

    The price of renting in London is obviously expensive, but I wondered if either purchasing an HMO or renting one through a company could be an option, where my wife and I occupy a couple of rooms with possibly an en-suite and rent out 3 rooms.

    Obviously, I may not make money on this deal but it would reduce my expenses.

    If I move on then it would revert back to a 4 or 5 bed HMO. I’ve never run such an establishment, so it would be a good learning curve for us both. I’m struggling to find similar scenarios and wondered if anyone here had any experience of such a strategy or may be able to point out the pitfalls.

    Thanks in advance for any help.
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    I should of pointed out my BTL is in Scotland and not London
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    There are a couple of options: you can rent out rooms to up 2 lodgers without having to go through all the extra HMO expenditure on fire regs, licensing etc and the first 7.5k of earnings is tax free.

    You can live in your own HMO but you would need to choose your tenants very carefully as it can be quite draining tidying up after people who do not treat the place as their own, also there is always a churn in HMO rooms so you might get it right and then someone leaves and start all over again, it’s a lot to deal with when you are working as your home is not your own.
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    Thanks for your input and I agree living with tenants will be a strain, however, I hope I can view it not as a permanent home for me either.  My wife is non EU and was part of a community of ex-pats in west London about 5 years ago, one idea would be to tap into this market.  Would you happen to know if this strategy would work as a rent to rent, rather than purchasing which will stretch me financially? I must admit however, your idea of renting 2 rooms and avoiding the HMO route might be the best option and hopefully gain in capital growth.
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    Only owner occupiers are exempt from HMO regulations with up to 2 lodgers. If your strategy is R2R or subletting you will be creating an HMO.

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    A good teacher must know the rules; a good pupil, the exceptions.

    Martin H. Fischer


    There are several things to consider and a lot depends on whether you want to create or avoid an HMO. Have a read of this thread:

    https://www.propertytribes.com/hmo-or-gu...42050.html

    As you are planning to move to London, Article 4 may also be a consideration, dependant on which Borough. This thread touches on the issue:

    https://www.propertytribes.com/hmo-plann...42249.html

    There is also an interesting insight into ICTB here:

    https://www.propertytribes.com/council-t...134-2.html

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    A good teacher must know the rules; a good pupil, the exceptions.

    Martin H. Fischer


    Thank you for the links, a very interesting read and I may need to read again to digest it all.  My preferred option would be to avoid an HMO and rent out a couple of rooms. I’m aware that sub-letting is illegal but hoped I could do it some other way.  My aim is not to make money but rather reduce my costs, which effectively keeps money in my pocket.  I do plan to buy another house in Scotland, so this would effectively be for working purposes only, although, I’d probably spend the majority of time in it. I’m in my 50’s, so it’s not going to be a long term move! Thanks again for taking the time to help.
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    What is subletting

    Subletting happens when an existing tenant lets part or all of a property they rent to another person. It’s perfectly legal, as long as the tenant seeks the private landlord’s permission first.

    In the words of The Housing Act 1988: “If an existing tenant lets all or part of their home to someone else, known as a subtenant, then they must have the written permission from the landlord to do so, even if this is implied in the tenancy agreement.”

    This as you already pointed out could also be used for R2R.  Play safe and you will be alright.

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    That is very interesting and thank you for pointing it out.  I just need to find a landlord that is agreeable. From this it doesn’t specify as to how many people can be sub-tenants, although, I’d guess that anymore than 2 would constitute an HMO, which would open a whole new can of worms!
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    As Gary pointed out above, it is only owner occupiers who have the 2 lodger HMO exemption. If you and your wife rent a property and take in 1 lodger it will be an HMO. If the property isn't licenced/have planning permisson (where required) then it will be your landlord who is responsible and is highly likely to evict you as soon as he finds out what you are doing.

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    Thank you, this was my understanding and I do not wish to participate in anything that is unlawful, hence the reason I asked the good people of PT. As I do not have sufficient funds to buy an HMO in west London I feel my only option is to either find a JV partner or an accommodating landlord who is willing to allow me to manage their HMO on a rent to rent basis, although I’m unsure if that is a realistic proposition.
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