In This Article
What is an HMO?
An HMO stands for Houses Of Multiple Occupation. What this means is a property that is let to tenants that are not part of the same family. An example of this may be three students or professionals who all rent a room in a house.
The property becomes one when there are at least three tenants and they have shared facilities such as bathrooms and kitchens.
Some landlords only invest in HMO properties and the reason that they generally do this is because the income generated is often higher than that of a single tenancy property. They do usually come with extra work though so anyone thinking of buying or turning their property into needs to do their homework.
If you are making the changes to an owned property to turn it into an HMO, these can be expensive as there are many costs involved, especially if you are creating new rooms.
Do you have a standard buy to let mortgage on the property?
If so, you may need to change your buy to let mortgage as you may be in breach of the mortgage conditions should you change the property to an HMO. This government website telling you more about renting out an HMO, and it can help with letting the property on a room by room basis.
Are you planning to take a mortgage to pay for the conversion costs or are unsure if your current lender would allow the change, I NEED ADVICE can put you in touch with a mortgage adviser with experience in HMO mortgages to tell you your options.
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What is an HMO architect?
An HMO architect is a qualified architect whose niche is designing HMOs meaning their main experience is in this subject making them the ideal professional to assist with the project.
Due to the challenges and restrictions that come with converting HMOs, it would be wise to look for a person that has seen these before and knows the solutions. An HMO architect will likely have a better idea of these than a general architect that works on a wide range of buildings.
They will likely have experience dealing with the local authorities making sure that the layout of the property meets criteria, designing the properties to give tenants a comfortable amount of space whilst using it wisely from an income point of view, and trying to simplify future maintenance issues and calculating how you can get the best return on investment following the project.
It may be possible that your HMO architect has contacts at the local council which could help with the communication side of things.
The architect should be qualified to the minimum standard, the qualifications needed for an HMO architect are an architecture degree recognised by the Architects Registration Board (ARB) and two years of professional architecture experience.
When should I appoint an HMO architect?
When you know that becoming an HMO landlord is right for you and you have the finances to do it, that would be a good point to reach out to an HMO architect. It would be wise to include them in the project from the very beginning as their input could be extremely valuable.
Your HMO architect should be able to give you an idea of costs before you commit to one and start spending money with them.
What are some tips when looking for an HMO architect?
When looking for any professional, it’s always a good idea to check reviews and past job history to make sure that their experience ties into the job that you need doing.
For example, if you are looking for an HMO architect, do you know any other local HMO investors that have used that person? If so, what was their experience?
You could ask for recommendations from landlord groups or perhaps builders that you know do a lot of work on HMOs. Be sure to ask for details of their qualifications and insurance and always do plenty of due diligence before instructing a professional.
Do I need a special type of mortgage if I’m arranging for an HMO architect to plan for my buy to let property to become an HMO?
If you plan to buy an HMO or convert a current property into one, you would need a lender that allows this type of tenancy setup.
Many lenders only allow one tenancy in place and have a maximum number of tenants (e.g. four) so if you turned your property into an HMO with several tenants on different tenancy agreements, this may be a breach of the lender’s terms and conditions which could land you in trouble.
HMO mortgages can be more expensive than regular buy to let mortgages so you should factor this in before you start paying for an HMO architect to start drawing up plans for the property.
You will want to work out what the expected rent will be when the property is converted to an HMO and how much the mortgage payments will be when on a correct HMO mortgage. This will allow you to get a good idea of your cash flow. There will of course be other costs and to work out your tax liability you should be speaking to a qualified tax adviser.
Would it be wise to talk to an HMO mortgage adviser too when considering reaching out to an HMO architect?
Yes, for the above reasons, unless you do not need a mortgage to finance the changes or already have a suitable one that allows the property to be let as an HMO.
It would be prudent to look for a mortgage adviser with plenty of experience in arranging HMO mortgages as they are considered a specialist subject so not all mortgage advisers advise on them.
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Conclusion
Arranging for an HMO architect to make it possible to convert your property into an HMO may be a great way of increasing your rental income but other costs will be involved too.
Remember, the process of renting out an HMO compared with a standard buy to let is more in-depth with more red tape and often licenses needed.
An HMO architect will qualify as a regular architect but more experience in the layout of HMOs could prove very useful to you. They can work with you throughout the conversion project to make sure you get the most from your investment.
Always do your homework when looking for the right HMO architect, be sure to ask for referrals, and check reviews and their qualifications.
If you have a standard buy to let mortgage and plan to put multiple tenants in the property under individual tenancy agreements, there is a large chance that this is against your lender’s terms and conditions so you should be confirming with them that they can allow this.
If you would like to speak with an experienced HMO mortgage adviser that can explore whether your current lender would permit you to rent the property out in this way, I NEED ADVICE can match you with a suitable mortgage broker.
They can also advise on the costs of replacing the mortgage if needed or raising money from the property for the conversion.
For a free consultation with an HMO mortgage broker, please complete the contact form.
The information on this page is not tailored to any individual readers and should not be considered financial advice under any circumstances.
If you are seeking advice about a mortgage, you should consult a qualified professional.
