The HMO (House in Multiple Occupation) and the property investor are having a love affair at the moment, the opportunity to by one property and create 6 units out of it and therefore than trebling your rent is too much for many landlords to resist, and it’s almost like every investor either has one or wants one, however to get a letting agent to manage your HMO can be a challenge as many run for the hills as soon as the word HMO or House Share is mentioned and I wanted to look into the psychology of why when an agent is presented with an opportunity to manage 6 or more units within 1 block and get a lot more percentage on a higher rent, they do not want to know.

Just for clarification, a HMO property is where 3 or more non related people share a property, in most parts of the country you can house up to 6 people in a HMO before you need planning (unless you are in an elective Article 4 area) and once you get to 7 or more people you will have to have planning consent. If the property is 5 or more occupants and over 3 stories in height then you will need to have a License (and some areas, this will apply to other properties too as selective licensing creeps across the UK)

The HMO is not a new thing, it has been around for many years and been the subject of a few TV programmes too which you may remember, Rising Damp, could be loosely described as a HMO as could the group of post graduates sharing their home in London in the 90’s programme “This Life” so why the sudden interest now?

From my perspective as an agent since 1990, when I first started trading, most HMO properties I was invited to look around resembled, squalid hovels that I would not put animals in, which therefore would attract a certain “type” of tenant. There were also Student house shares, which would regularly get trashed or tons of complaints from neighbours and these two types of HMO (which were the main market for house shares until back then) made any self respecting agent think NO WAY!  As an agent we would not want to be dealing with the type of tenant that was attracted to House Shares or students and their hassles, neither would we want such squalid properties on our books, therefore lowering the “perceived” standard of our property stock to our local market.

So for most of my early lettings career if you asked me or one of my team they would have “sorry we don’t let rooms” and that would have been that, and many agents are still of this mindset. When talking to a few other ARLA agents on their thoughts of HMO properties  I was surprised that still many of them in the outer London areas would not touch a HMO property with a barge pole, which is a shame now that the HMO market has in many ways “cleaned itself up”.

As the housing supply reduces and demand increases, and people move around more for work, house shares are going to become a major part in housing the nation, and they themselves have undergone massive change due to this, but the letting agent community needs to catch up with the changes that have occurred.

In 2004, the Housing Act brought about massive changes to the requirements and specification required for a HMO property, with strict guidelines for landlords as to how they should be constructed and managed, many of the regulations are based around fire safety and being suitable for the number of residents it is designed for.

The effects of this meant that the HMO had a facelift, the standard of them improved, a more responsible landlord started to invest in them and more recently this has then led to the “Professional House Share” where a property in a nice location, converted with space, communal areas and a high standard of fittings, to appeal to the professional market, which is the new concept slowly working its way across the UK.

Yet still so many agents still say NO to HMO’s. Personally, I would not deal with any non-compliant, run down, overcrowded type properties or any that owned by landlord that do not take their responsibilities seriously but with a bit of staff and company education, learning about the regulations that apply to HMO properties, working with the council on Planning laws locally and what they expect in their local HMO properties also understanding fire regulations, this is a very viable option.

If an agent can take the time to understand and adapt their processes for the individual issues that are unique to house shares, like sourcing tenants, managing the communal areas and getting the right “mix” of residents that will live well together but if all this can be put together they can be an extremely profitable and rewarding new market for us all into the future.


Sally Lawson