Multi-Lets

Configuration – 5 and 6 bed HMOs are normally either a large mid terrace property or a three storey property. Standard five bedroom HMOs are normally configured with a bedroom on the ground floor, three rooms on the first floor and an attic conversion. Three storey mid terraces can fit 2 bedrooms on the second floor. Sometimes these HMOs have en-suites in all bedrooms, however a lot of them will have a few en-suites and a few bathrooms.

5 and 6 bed HMOs are the most common HMO type and in some cities you will see a much higher number of 6 bed HMOs in the same area as landlords implement the same configuration. In Liverpool for example there is a high concentration of 6 bed student HMOs in Kensington that all
have single bedrooms and 3 shared bathrooms. In today’s market these can be difficult to let with the rise of more purpose built all en-suite student accommodation in the city centre.

Investment management – It’s important for investors to analyse the numbers before deciding what configuration to implement. For example adding a fifth bedroom in the attic could increase the rent by £400 per month but add £25,000 to the refurb. It’s important to analyse does the rental return
warrant the investment, and also is there any or a lot of uplift in the value it adds to the overall building valuation itself.

Licencing – these do require a licence to operate from the Council as a rule so landlords should examine the cost of the licences because this can significantly eat into cashflow. The costs are always published on the council website.

Planning – these do not need permission to convert the use to a house share. However remember that do require planning permission of you rent to 7 or more tenants in the same building. So if you have a six bed HMO with one couple in a room, or a five bed HMO with 2 couples in 2 rooms then
you will need planning permission in both cases.

Property Valuations – Valuations in this area can be very grey indeed. Five bedroom HMOs are almost always given bricks and mortar valuations however six bedrooms are more negotiable. It is important to configure your HMO in such a way that it has lost it’s identity as a residential house, for example adding en-suites to all bedrooms. Having a licence and planning permission for HMO almost certainly help as it proves it no longer has residential use.