HMO property investment

HMO property investment and why you should seriously consider it

Non licenced HMO property investment

The first thing to point out is that you can operate a multi tenanted property (HMO) without needing a licence. For instance we have clients that will purchase a 3 bed semi and then convert the dining room to a bedroom. This could then easily be let to 4 students for £1,125 per month (£65 per week per room) £65 - £75 is the per room figure that applies almost everywhere regardless of property value. So an HMO property in Portsmouth valued at £175,000 will attain the same rent as a similar HMO property in Cambridge city centre at £300,000.

The instances above would not be subject to mandatory HMO regulations or licensing, indeed as long as you stick to 2 storeys there is no reason why you couldn't find an extended 3 bed semi that could be let to six individuals without the need for a licence. However you would need an HMO mortgage.

The advantages of this particular HMO property strategy are: no HMO licence application cost, you will not incur the cost of complying with the building regulations associated with a licenced HMO property, there is an abundance of this type of property, the property can easily be resold as a family home. Another advantage is that an HMO mortgage will be easier to obtain as the lenders can also appreciate the benefits of not needing to be licenced.

IMPORTANT: Whilst a 7 letting bed roomed property over just 2 storeys would not be subject to mandatory HMO licensing, it may well come under local planning regulations. You must contact your local council to get the definitive answer, but generally 6 beds and below will be ok, above this number and they may look at things like car parking space and communal facilites. Many councils will not insist on consultation with neighbours, but again you should check this for yourself.