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  • HMO & Multi-Lets

    Renting to 3 lodgers - Compliance help!

    Hi All,

    Finally bought my first investment property! - did a 'Let to buy' so I renting out my apartment in central Birmingham and moving into a 5 bedroom house on the outskirts of town.

    I am going to rent out 3 rooms in my new house. I am doing work at the moment so each rented room has its own ensuite or bathroom.

    The builder mentioned I may need fire doors / certain smoke alarms to be compliant with regulations. I understand its not a full HMO as enven though its 3 storeys I only have 4 people in the house.

    Can any one confirm or point me in the right direction?

    Thanks in advance!

    Ollie

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    I'm no expert on this, but I'm fairly sure more than 2 lodgers means you DO have an HMO, see here:

    https://www.lodgerlandlord.co.uk/2010/02/...to-an-hmo/

    I'm sure someone else on PT will have more information for you, although Sundays can be a bit slow :-)

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    This is an HMO. You have three lodgers and you are sharing amenities. When you say it is not a "full" HMO I assume you actually mean that a licence is not needed. You may be right about this as the mandatory licensing requirement is three storeys and five occupiers. However, you should check that the local authority does not have, or plan to introduce, any form of additional licensing scheme. You should also be aware that the government is consulting on changes to the mandatory licensing definition which may very well bring this property within the mandatory licensing definition.

    In any event as an HMO you must comply with the HMO Management Regulations which impose requirements relating to repairs, electrical safety checks, and fire safety among other things. You will certainly need to think about fire doors and alarms as your builder has indicated.

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    David Smith
    Landlord & Tenant Solicitor
    Anthony Gold Solicitors

    Find me on LinkedIn: uk.linkedin.com/in/dsnsmith

    All opinions are my own and do not reflect those of my firm. No comment made should be taken as legal advice and you should consult a solicitor or other legal professional for advice on your specific situation.

    Let me get this straight: a resident owner taking in lodgers in his own house is subject to HMO rules just the same as if he let the whole house out under an AST and didn't live there?

    Andy

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    All the best

    Andy

    The bigger issue is if your mortgage lender will allow more than 2 lodger households for all the reasons Andrew has mentioned

    Which is why you don't need more than a 4 bed property as your PPR

    2 spare rooms for lodgers

    1 spareroom for an office or occasional spare room for visitors

    1 bedroom for your usage

    That way you usually won't fall foul of lender conditions

    But verify first with your lender


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    As far as I am aware when major building works occur there are requirements for just domestic properties

    Things like self closers for doors

    Ensuring your residential property is HMO compliant like a normal HMO isn't worth it

    You need to be able to sell the property as a normal residential property

    Undoing HMO works is usually not cost effective

    Or you could just have 2 lodgers

    Some rent out a spare room as an office

    You could even use the 3rd spareroom as a airbnb Listing

    But of course lodgers can be very transient so even if you had 3 lodgers that can easily change very quickly!!!!

    Better to have just 2 lodgers, if a 3rd one occurs every so often who is going to know!?

    You can't refurb to HMO standard for the odd time you might have a 3rd lodger

    You can now earn tax free £7500 from lodgers

    Any lodger earnings over that have to be declared to HMRC

    It may be worthwhile being taxed on the full amount of lodger income as sometimes this is more tax effective

    Though there have been so many recent changes all this may have been affected

    One big issue which you may not have considered is issues with your mortgage lender

    Most mortgage lenders have restrictions on how many lodger households may occupy at any one time

    You would be wise to ascertain what your lender allows before you consider any further improvements

    Remember you CANNOT allow any of the lodgers to have locking doors

    As a live in LL you need to be able to access ALL areas of your property WITHOUT permission being required from the lodgers.

    Though of course courtesy for the lodger from the LL is usually adopted

    As soon as you allow locks on lodger bedroom doors you will have created a statutory AST and would need to compliant with all aspects of a tenancy

    This I'm sure you won't want to do that!!

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    Hi,

    Look up YourLawStore on this forum.  One of our members has an excellent information pack on what you can and can't do with lodgers, and that legal pack says things different to what has been expressed on this thread by some members.  I found the pack excellent in all respects, and at a very low cost.


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    I notice the RLA has a lodger agreement available free for their members, too.

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    Not quite on subject but something you ought to be aware of if you're not already.  Right to Rent checks apply to lodgers as well as tenants.  You need to document that you've carried out the checks and keep copies of documentation.

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    Sandra Savage-Fisher