What is a House in Multiple Occupation (HMO)?
According to both planning and licensing definitions, a house in multiple occupation (HMO) is defined as “a building which is occupied by three or more people forming two or more households”. It is important to note that students within a group beyond are always considered to be separate households. The legislation is more concerned with lifestyle than how the contracts are constructed.
Will my HMO need a licence?
It is essential to understand that licensing and planning consent are two separate things, and you always need both in Loughborough. You can buy a property with planning consent, but licences are non-transferable, and you must apply for your own.
On the 1st of April 2023, Charnwood Borough Council introduced an Additional Licencing Scheme covering all of Charnwood. Under this new scheme, all HMOs (three or more persons forming two or more households) will require a licence regardless of the number of bedrooms. Failing to have a licence can result in a financial penalty notice of up to £30,000 or an unlimited fine from the courts.
You can read more about this and apply here.
Professional or Student HMOs?
Student HMOs typically work on an annual cycle, with tenancies starting on either the 1st of July or the 1st of September. Advertising starts in October to secure tenants for the following year. Most of these are let on single agreements to a group of students. They are typically more financially secure than professional HMO tendencies as you usually have guarantors in place for each occupant.
Professional HMOs are usually let on an individual room basis as and when they become vacant. Thus these occupants rarely know each other before moving in. Whilst these tenants are often employed, they are usually relatively low income, thus a higher financial risk than students with individual parental guarantors. Although they generally have longer tenancies and lower wear and tear than student properties. They also spread the risk of occupancy. Failure to let a student property by the start of the academic year could be financially catastrophic. One or two rooms, less so.
Can you sum this up?
An HMO is defined as “a building which is occupied by three or more people forming two or more households”. Students are always considered to be separate households. All HMO's in Loughborough need either expressed planning consent or continuous use since 2011 due to the Article 4 directive. All HMOs in Charnwood need a licence, irrespective of how many people occupy the property. They are typically much more management intensive than conventional rentals, although the larger ones can yield excellent returns.
What is Loughborough’s Article 4 directive on HMOs?
Since 2011 Loughborough has had an Article 4 directive covering the whole town. This removed people's customary permitted development rights to change the use of properties from planning Use class C3 (single dwelling house) Use class C4 (small HMO). Thus, most HMOs in Loughborough are ones that existed before the directive came into force. New HMOs can still be created, although they now require full planning consent. The most common and complex planning objections to overcome are of area saturation and parking.
The economic impact of this control is that HMO properties now demand greatly more rent than conventional properties because of the effect on supply and demand ratios.
If you are considering buying an existing HMO, ensure that the property either has express planning consent as a C4 small HMO or has proven uninterrupted historic use since 2011. This typically comes as a CLUED (Certificate of Lawfulness for Existing Use or Development). HMOs with more than six occupants are classed as ‘Sui Generis’ and have always needed planning consent.
Should I buy a HMO?
HMOs that are put up for sale are typically priced based on their income potential rather than traditional property valuation methods. In other words, their prices are determined by the amount of rental income they generate. Thus, converting a C3 single-dwelling house into a C4 small HMO can potentially be more financially rewarding compared to purchasing an existing HMO.
HMOs are also significantly more management intensive. The wear and tear on the property can be more significant due to the higher number of occupants. Additionally, tenancies in HMOs tend to be shorter in duration, and the turnover of tenants may be more frequent. Managing HMOs also involves dealing with a larger number of occupants, often including young individuals and their parents. HMOs are not for beginners. Successfully managing HMOs requires a solid understanding of the regulations, efficient maintenance practices, and effective communication with tenants.
Do all HMOs offer the best financial returns?
When it comes to HMOs, bigger properties tend to be more advantageous. Due to the added costs involved in running an HMO, smaller two and three-bed HMOs may not always be financially viable. In such cases, it might be more beneficial to rent them out as traditional single-family homes. On the other hand, larger HMOs with five or more bedrooms typically yield excellent returns compared to single dwellings.
Huntleys has earned a strong reputation for providing top-quality student and professional HMO lettings and management services in Loughborough. We create stunning digital particulars highlighting the individual attributes of every property we market, with video tours and floorplans as standard. As a result, Huntleys have become Loughborough and Charnwood's most followed estate and letting agent.
We assist landlords in navigating the complex landscape of regulations while offering comprehensive services to find and manage tenancies. At Huntleys, we take pride in keeping landlords well- informed about current and future market trends, ensuring they stay ahead of the game. Our ability to deliver such outstanding service is made possible by a team of passionate and highly enthusiastic individuals who take pride in their work. Visit our offices in Loughborough town centre to meet the team and find out what we can do for you.
Full marketing campaign inc Floorplans
Prequalification of applicants
Conduct viewings and provide feedback
Negotiate the best deal for you
Provide you with a referencing report
Produce a comprehensive tenancy agreement
Set up a standing order
Secure funds and handover keys
Our tenant find service +
Register the Tenant’s deposit
Collect and process all rent payments
Contact the tenant regarding any rent arrears
Advise on action when a tenant doesn't pay
Produce and email monthly statements
Produce annual summaries of account
Negotiate any renewal or extension
Serve any required notices
Our rent collection service +
Produce an Inventory & Condition Report
Record the Council tax and Utility liability
Quarterly property visits
Manage maintenance Arranges (no mark-up)
Act as the tenant's point of contact
Manage any statutory safety checks
Conduct a checkout inspection
Negotiate any deposit deductions
Let with Huntleys
We are here to provide a straightforward, ethical and innovative sales and lettings service in a professional environment with a committed and caring team.
01509 320 153
01509 320 320