Ask Matthew Your Property Questions

Hi Mathew, when is your next HMO workshop?

Hi Brian

Good to have you with us.

The next workshop is actually REALLY soon – takes place on Saturday 19th July in Milton Keynes. For more details go to http://www.hmocashflowsuccesssystem.com

As a special exclusive for my blog readers only, I’m doing a special deal for you. I can’t really disclose it on the site but for more details, send me a note at info @ your hmo expert dot com

Hi Matthew, I understand some HMO landlords use License Agreements instead of ASTs. Could you explain the difference and the pros and cons?

Hi cdullea

I’ll admit that this is not as clear-cut as many think and you really need to take advice from a solicitor who is experienced in tenancy law.

The basic premise is that a licence agreement gives the landlord additional rights over and above the tenancy agreement – such as being able to move the tenant to a different room, move the tenant out quicker etc.

However, what many landlords don’t realise is that after 6 months, it AUTOMATICALLY converts to a periodic tenancy which gives the tenant the same rights as a normal AST.

I think its essential to use a Licence Agreement if you are taking somebody for less than 6 months – ie a short term let – we often do lets of up to 8 weeks but if you are planning on making a professional business out of HMO’s – you’re probably better-off sticking to AST’s.

Hello Matthew,

First of all, thanks for a great site into a subject that needs a fair amount of examination and explaining.

My question concerns defining my property as a HMO or not. I have a 1st and 2nd floor maisonette, with a ground floor entrance.
There is a commercial business on the ground floor but we only have a staircase on the ground floor which is fully separated from the commercial occupant by a normal wall.

Will the council count this property as having 2 or 3 storeys?

I have 4 bedrooms and will only ever have 4 occupants.

I have a mains powered & interlinked smoke alarm system and a CO2 fire extinguisher in the kitchen area.

I do not have fire doors, but the doors to all the rooms except the kitchen are old solid victorian doors.

What I want to know is how will my property be classified and what alterations do you think I will have to make?

Thanks very much.
ShinyLL

Hi Shiny

Thanks for your comments – I appreciate them.

The key criteria for defining your HMO are occupants, amenities and storey’s.

So the first key one is occupants – you state that you are only going to have 4 occupants.

The second is amenities – I assume they will be sharing kitchen and bathroom facilities.

The third is storeys – you state that it is 3 storeys.

In terms of its classification – yes it is a HMO but no it will not be licenced (although depending on the area, it may fall under selective licencing).

You won’t technically need to make any alterations but I’d advise putting a fire blanket and heat detector in the kitchen together with replacement of doors as and when they fail.

You can also check out this fuller article I posted here:

http://yourhmoexpert.com/hmo-regulations/hmo-regulations-in-a-nutshell/#more-32

Hope this helps
Matthew

Hi!

I am just starting out as a letting agent in the Nottingham area, but have been thrown in right at the deep end with my first job i’m afraid with a possible HMO on my hands!

The landlord of the property is actually my dad, and this being his first rental property we are looking into letting it out as a multilet to achieve the best rental income for it.

The property is a 4 double bed with 2 floors and aiming for just one tenant in each room. So i believe licencing will not be required for this one… however, i do have a few other questions i’m hoping you more experienced guys can help me with.

He is unsure what exactly he must provide in the way of furnishing in a multilet… should he wait and ask each tenant if they have their own furniture? The only tenants he is allowing in the property are professionals in full time work, as the property is refurbished to a very high standard (he was planning to sell, but with the current market this is not possible now)

So…. should he provide furniture for each tenant/ask them if they have their own? He has a washer and dryer in there, an oven too, but must he provide more?

Also, he wants to not include the bills in with the rental, and both he and i need to find out how this would work. Who’s name should the bills be in in this case? Are there any bills which must be in the landlords name? Is this the best way to do it? I dont want to advise him to include the bills in the rent as i have no experience of doing this and obviously dont want to advise wrongly. Also, what happens if there is a disagreement between the tenants about who pays what for each bill?

Would each tenant have their own AST in the case of a multilet or is it the norm to have a special HMO AST to cover all tenants?

Thanks in advance for your advice!

Best wishes

Sally

Hi Sally,

thanks for your questions which are great!

I’ll answer each in turn.

1. Furniture. Its common practice to provide furniture for your HMO’s – why? Because most people moving into HMO’s have little or no furniture and would expect it to be provided for them. You don’t need to spend the earth but at the very minimum, I’d expect bed, mattress, mattress protector, 2 bedside chests, chest of drawers and wardrobe. If its a large room, we often include a nice easy chair as well.

You will also want to furnish the lounge with sofas, coffee table, TV and dining room with a table and chairs.

For a quote on furniture, visit my preferred suppliers http://www.furnitsure.com and ask for a bespoke quote – last time I looked, they were doing a 5 bedroom house for £3899 including lounge/dining room furniture.

2. Bills. It is also common practice to include bills in the rent unless each room is self-contained and has its own meter. Bills will cost you about £100 per tenant per month. If you don’t want to include them; good luck but I suspect the hassle will not be worth it eventually. Its only really student lets where they pay all the bills as they are in for one year and responsibility is theres.

3. AST’s. Most lenders want a single AST – in practice, this doesn’t happen. So just use a single AST for each tenant. Or Licence Agreement if you want a bit more short-term protection.

4. Licencing. I’d check with your local council what needs to be done – although it will not need mandatory licencing, they may have selective licening conditions in Nottingham and it is still a HMO so will need to meet basic HSRS guidelines such as fire alarms, extinquishers, means of escape etc.

hope this helps
Matthew

Hello.
2 questions.
I am moving in with my partner and am looking to rent my flat to a family friend and 2 of his friends.
At the moment, the flat is 2 bedrooms and 2 floors. (downstairs living, upstairs bedrooms).
There is a box room which is more than big enough to make a third bedroom.

1) Is there anything I would need to do to change it from a 2 bedroom to 3 bedroom flat, and what would be the cost (if anything) of this?

2) Would I need a HMO license for
a) Letting to the 3 of them,
b) Letting to just 2 of them.

Any help would be appreciated, it’s all new to me.

Hi Gavin,
thanks for your question which is a great one to ask as the law can be somewhat vague!

Basically, as soon as you rent out anything to more than 2 people it is classified as a HMO and certain regulations may come into force (ie fire doors, fire safety etc).

In most areas you wouldn’t need a licence but would need to follow the Housing Health and Safety Rating System to ensure your property comes up to standard.

Its worth giving your local council a call and talking to the Environmental Health team to see whether you need to do anything else.

Otherwise, just let to 2 of them.

One thing to point out is if the other 2 people are a couple, then technically they are 2 households which depending on the councils definition may mean that you do not have to consider any other HMO regulations. However, you would still need to work through the HHRS regulations.

hope this helps
Matthew

PS by the way, the box room should ideally be a minimum of 6.5 square metres in order to use as a room but again, it can differ from council to council. Give them a ring – they don’t bite.

Hi Matthew-raising deposits to purchase any rental properties currently is very challenging but it would appear that for a hmo it is even more difficult. Can you give an advice on raising a deposit for hmo as I would like to ensure that finances are in place before I start investigating market more thoroughly in my area. Thanks

Hi Jane,

OK – the best advice I can give you here is to get the very best deal you can relative to the value of the property. The larger the level of discount that you are able to achieve, then the larger the amount of equity that you can lock in when you purchase the property.

We have lenders in place that can lend to you based on the valuation price and not the purchase price which sometimes can allow you to use the difference as your deposit.

hope this helps
Matthew

Matthew thanks for reply for finance. Sounds like no money down finance which I am familiar with. Should I be looking for a discount of at least 30% off market value for this system to work?

Hi Jane,
Yes ideally you should be looking for 35-40% off but 30% will get you most of the way there!
Good luck and once you’ve found something, let me know.
Matthew

Matthew thinking about what type of market to target. There is talk currently that in the climate it is best to stick with tenants that are on LHA as you know their rent is going to be paid. This means that your rent will stick at a certain level rather than go higher with professional market. What are your views on this? Thanks for your answers, this is really helping.

hi Jane,
There are four types of market – all with their own characteristics. You can make money with LHA tenants but don’t count on being paid on time if at all depending on the type of LHA tenants they are!
I stick to professionals myself and just build in voids/bad debtors!

Hi Matthew, I’m looking at acquiring a property through a purchase option in Rhyl, North Wales. The property has 8 bedrooms and four reception rooms. Use to be a B&B, currently used as a private residential home.
I have made enquiries with the local council who say they are not granting any more HMO licences, though they also tell me that out of a total of 850 HMO’s, only 50 are licensed. What is the risk I am taking if I bring the property up to HMO regs. and let out to 8+ tenants, but don’t get a licence? What would the process be if I had a surprise visit from the local HMO officer?

Hi Maninder,

You are taking significant risks with taking this strategy. I would not advise this.

You can ask if they are ok to allow HMO’s that are less than 4 (ie unlicenced) but I suspect they will say no.

I would recommend converting to flats if you can gain permission.

Otherwise, you could see if it may be suitable for social housing which they may be amenable too?

Hi Matthew,
I currenly have 4 buy to lets, but would really like to add an HMO to my portfolio. I have read lots on the internet, but with only about £8,000 to invest, I am not sure where to start. My husband is not convinced and can not persuade him to spend out on any mentoring sessions or educational days that offer no money down info. Please help……

Hi Andrea,
thanks for your note. The best place for you to start is with my FREE 10-part ecourse on HMO’s. You’ll get one a day for about 2 weeks. This gives you the basics of where to start. If you need more help, then look at http://www.hmosurvivalguide.com which is my entry-level product for only $7 and its a 90-day plan that if you stick to, you can achieve.

Other than that, send me an email and see if we can work something out or have a chat.

Or, we could source something for you. But do be aware that you’ll need between £10-15K to deck out a HMO in real terms to get your tenants in. Hope this helps.

Hi Matthew,

I like your site and I got your survival guide, but I have a very specific aim and I don’t know if it is realistic and I am hoping that you can help!

I have bought 2 buy to lets, which are cash positive, but were bought on a long term strategy for my pension.

Now I need to generate more cashflow.

For personal reasons I would also like to move out of my present house and as it is a large 6 bed/3 receptions I wondered if it could be a successful HMO?

To be honest if I were to buy an HMO I would follow your advice and probably not start with this property, but now doesn’t seem the sensible time to sell. It has 3 floors and the only potential tenants would be on housing benefit. If this could work I would also need to fund the purchase of a smaller house where I want to live and equip this house as an HMO, but there is equity in the property.

On the positive side – if this could work the cash flow could be excellent as I only need £400.00 approx per month to pay the mortgage.

I am going to the Property Exhibition on Saturday and if you think that you could help me, maybe we could have a quick chat?

Hi Jenny

great to hear from you and really good to hear that you are considering getting into the HMO market.

First of all, you need to understand the demand in your area – have you signed up to my 10-part ecourse and gone through the RENTAL DEMAND part of the course – to see what type of markets are available to you?

Secondly, once you’ve determined that there is demand, you then need to ring your local council and find out their stance on licencing. It’s likely to need a mandatory licence with it being 3 floors and 6 bedrooms but check first. They are usually very helpful and may even come out and look it over for you.

Thirdly, you need to let your lender know that you’ll be letting. Speak to me about the best way to go about doing this on Saturday.

Fourthly, you’ll need some furniture unless you already have suitable stuff, so take a look at http://www.furnitsure.com

Fifthly, you may need to install other safety measures such as fire doors & fire alarms. I can help on both depending on where you are in the country.

hope this helps – lets speak at the property exhibition on Saturday- anybody else coming – I am speaking at 12.00pm?

http://www.rhettlewis.com/propertyexhibition

Hi Mathew,i subscribe to YPN magazine and thats where i found your articale,i must say that i have read everthing i possibly can and i find you to be very honest,true and very helpful.I currently have four BTL but im now looking to do HMOS since following your ecourse but i live in liverpool and i cant seem to find the right area for professionals can you please help me on this matter thanks jeff. PS Is there any chance you could come to Liverpool to do your seminars or would you consider doing a subscription site where by we could pay every month for your services,i would be grateful for your answers to my comments.

Hi Jeff, thank you for your kind comments – I really appreciate them! I do try and tell everything how it is so you know both the risks and the opportunities.

OK – I know people who do lets in Liverpool but generally in the suburbs (not too sure of the names) to professionals. You need to follow the ecourse guide (hopefully you’ve signed up at the top-right hand side of the site) and use spareroom to do your research.

I am thinking of coming up to manchester to do a course but dependent on a few factors. I am also looking at a subscription site at the moment which I think might be right up your street!

Keep in contact – Matthew

Hi

Have you had any experience issuing a section 8 as this is something i am considering doing as I have a tenant who has paid no rent for over the two months needed to serve this notice

cheers

Kurtis

Hi Kurt,
Yes a section 8 can be issued once the tenant is two months in arrears. This gives them 14 days to settle up or get out. There are different grounds you can evict them on but generally I use grounds 8, 10 and 11.

If they do not leave, you then need to apply for a possession hearing at court. This will take about a month to get a hearing.

Good luck!

And remember, you can only use a Section 8 if you are using an AST!

Hello Matthew,

Thanks for a great site. Me and two of my friends are trying to rent 3 storey, 4 bed house. We are just friends.
Does landlord need HMO Licence to let us this particular property?

Cheers

Tomas

Hi Tomas,
nice to hear from you and thanks for the kind words.

OK – if there are 3 of you, then it will be classified as a HMO but you generally won’t need a licence. However, this is the landlord’s responsibility to speak to the council about this.

For your own safety, there should be fire alarms in the property at the very least plus a heat detector in the kitchen and fire doors on all hot areas.

Hi Matthew
I have seen your peice in YPN and was excited to see ‘we can do it for you’ as the closing line. Question is what do you do? I have a number of houses which I would like to start converting to HMOs once they become vacant but as a remote landlord (houses in Northants, Leics and Beds and I live in Surrey) I cannot manage them. Do you do it for me as you say or do you provide training workshops for me to do it myself? thanks Richard

Mathew, I always read your stuff in the YPN mags as I have 3 hmo’s + various single lets, but Ive heard alot about nmd deals and wealth angels etc, what I’m getting it is I see lots of deals every day that would stack up but funding is always a problem with cash tied up in excisting, as you no Hull is a student town with bags of potencial, have you any tips on funding.
Andy

Hi Richard, sorry for the delay in responding to your question!

Yes, we can set-up, manage and run your HMO for you if it is suitable to be let as a HMO. I am based in Northants and we already cover Northants, Bedfordshire, Cambridgeshire and Derbyshire. Adding in Leicestershire wouldn’t be a problem.

We also do training workshops as well but this is for if you want to let them yourself really.

Hi Andy, the best way for funding right now is through commercial route or to avoid cash, use lease options although your hit ratio will probably be lower as most owners want to SELL. Yes Hull is a great town and where I’m from originally!

Hi
I am a landlord letting only to students.I ask if they are students but do not verify if they are as the AST agreement(though some have stayed for less than 6 months so should have been a licence?) says they are responsible for council tax. I noticed on an earlier thread that you say it may not be an HMO if 2 or less people? I have not had more than 2 students in at any one time…not intentional as it is a 4 bed place. My question is, if council say I am responsible for tax and my tenants are found to have been lying about being students, where do I stand? Thanks

Hi Matthew,

I have some fundsto invest and was looking into HMO. Mortgage lender is OK with HMO aslong as the property doesn’t come under mandatory or additional licensing. Only gripe is that the lender insists on the the property under a single AST. Multiple AST’s not allowed. How do i overcome this, rent the rooms out under license agreements ? What about longer term room renters (12 months) ?

Your advice would be most appreciated.

Regards,

Nav

Hi Nav, you could let the property out to your management company who you then give permission to sub-let the property too? Otherwise, even a licence agreement becomes an AST after 6 months so you can’t relaly get out of it this way either. Long-term tenants make no difference to the lender or the type of agreement really.

Best to find a lender who is happy lending on HMO’s to multiple AST’s or follow above instructions.

Hi Matthew,
Thanks for the great Website!

Do you have any tips on how to minimise the utility bills for the landlord where water, heating and lighting are included in the rent?

You mentioned in another post that bills can be £100 per tenant per month but do you let the tenants have the heating on 24/7 for example?

Thanks
David

Hi David, the utility bills can be hit and miss. I recommend a) having the heating on timer controls b) ensuring tenants are aware that excess bills WILL be charged for c) managing the utilities pro-actively by regular inspections, monthly meter readings and trying wherever possible to bring in environmentally friendly measures (ie energy saving lamps, insulation etc)

Could the management company be my own company who i am the director of ? After, all the the compant is an entity in its own right. As i have now found a lender on HMO’s but single AST, however they allow company lets. So in theory i can let my property to my company who i then give permission to sub-let.

Hi Nav, yes this is correct, you can do this!
Matthew

Dear Matthew

Help! We have own 6 properties. 2 x 3 bed cottages , 1x 4 bed house, 1 x five bed house (our former family home), 1 x 5 bed flat and 1 x 4 bed flat. Our houses are all let on single ASTs to students at the University renting for 11 months at a time and living in friendship groups. The rooms are in houses/flats that also have a large sitting room/dining room, kitchen, one bathroom in the case of the two cottages and the 4 bed house, two bathrooms in all the other proerties. The kids all live there on a home from home basis and none of the properties are run as bedsits. Each property has a AST which they have all signed appertaining to that property. We have always adhered to the strict guidelines of the University Accommodations and so have fire doors on all the kitchens in all the properties as well as fire blankets, fire extinguishers, smoke detectors (in the case of the flats hard wired smoke alarms).The Council here in Eastbourne have written and told us that the properties are all HMOs and as such will have to have basins in each room when the property has four or more living in them. In the case of the house that is not so much of a problem, but in the case of the Victorian Mansion flats where we completely refurbished and installed two bathrooms in each property it really seems a bit excessive. What is our position? Is there no regulation that covers single ASTs with students house sharing. They are always friends who get together to share and this is the norm.

Hi Pennie, wow washhand basins – thats a blast from the past! This part of the Act was actually moved towards being taken out in October 2007 but its not been removed from Stature yet and won’t be until the next Housing Act is passed.
My response would be twofold – 1) contact your landlord association regional rep – NLA has fought on this front many times and get them to help you talk to the council about this – 2) send them a letter stating that you believe this is above and beyond the Act and most councils are not enforcing this because they expect it to be removed in the next Housing Act update.

If they insist, then I would personally then go to the Residential Property Tribunal through the appeals process.

best of luck with this – none of my councils has made me do this and we have HMO’s in 5 districts and 3 counties!

Hi Matthew, I have a property that I rent out to 10 students as a shared house. They are all friends who have lived together before and I have them signed up to a single AST for which they are jointly and severally responsible. They have no locks on doors, share a living room and 2 adjoining kitchens, and to all intents and purposes live as a joint household. I have 2 problems: 1st, the neighbours don’t want students living next to them and have complained to their friend, the leader of the local council – and as a result I am now being pursued vigorously for apparently breaching planning permission due to an alleged change of use from a dwelling house to an HMO. I can see that I need an HMO licence but cannot understand whay there is a material change of use – am told by the council that once you go over 6 people in a property it automatically requires planning permission – is this correct? My second problem is that since they moved in it has transpired that one of the students has turned out to be part time – and the council are now saying I am liable for council tax. Is this true?

Hi Christian, hmm bad news on your neighbours!
On the planning side, the national guidelines stipulate 7 or more requires a change of use from a private residential home to a HMO. If you have run this as a HMO for some time and it was run as a HMO before you owned it, then the granting of the change of use should be fairly painfree. However, this is before the neighbours got involved. I do not know if any noise pollution has occured but a quiet word in the students ears wouldn’t go amiss.
On the council tax front, then this is a difficult one as I do not know the rules for a part-time vs full-time student so would advise that you follow up and investigate this further. If it means you have to pay X%, then charge this to the student(s) who failed to disclose this to begin with! I wish you luck – report back on how you get on!

Hi Matthew
The neighbouring property to us has been sold and the builder is turning the downstairs into a bedroom with seperate lounge and the same upstairs with shared kitchen & bathroom and occupants will have their own locked door (but share the front door). I am not writing asking how to stop this as I appreciate the climate is such that people cannot afford to buy houses and need accommodation. My concern is that of noise pollution as our houses were built in the 1940s and only have a brick and breeze block with no gap for cavity insullation to minimise noise between the walls. If the builder is turning the house from a single household to shared (I am getting conflicting research on whether this qualifies as an HMO), but should he at least be looking at some sound proofing on the party wall? Should he also be getting planning permission?
Thank you for your guidance if able.
Jackie

Hello Jackie, an interesting one. I would speak to the builder to see if he is putting insulation in and explain your predicament. You can also talk to building control as he should be using them if he is doing a conversion. Whether he needs planning or not I cannot comment on as I don’t know how much “conversion” he is doing.
A HMO is where 2 or more unrelated people share so sounds like it will be a HMO. It sounds like flats though with a shared kitchen/bathroom but you’d need to supply more info.
Main thing is getting your insulation sorted though but if they have professional tenants, they shouldn’t be that noisy.

Hi Matthew,
Thank you for the useful emails you have been sending me since attending the last Landlord & Buy to let show.

We have a detached 4 bedrooms, two receptions, double garage property in West Molesey, which is currently the family home. We have been unable to sell in the present market. We are considering converting it to HMO for 5 professional tenants. Is it a good idea to use a detached house as HMO? I have read somewhere that the returns are better when the property is a mid terrace. Is this the case?

Regards

Lydia

Hi Lydia, detached houses are fabulous for HMO’s! Go for it, just test demand first and if it looks ok, then get on with getting it converted. let me know how you get on!
Matthew

PS and thanks for comments on the ecourse, glad you are enjoying it!

Hi Matthew
Came to see you give your talk in Ipswich and talked to you afterwards – got an urgent need to find finance for an HMO in Birmingham – my usual broker can only find a deal where the interest is way too high or a better rate but will only do on repayment basis -will lose house to cash purchaser if dont find something else quick -any ideas gratefully received (I have a property portfolio of 13 buy to lets – this is my first HMO and it is already set up and licenced as such).
Thanks
Sue

Hello Matthew
I have ‘double-upper’ (maisonette) flats on the third and foruth floors of a tenement. The local fire brigade (Lothian & Borders) are insisting that sprinkler systems be installed…even though the usual level of HMO fore safety requirements have been installed. The sprinkler they say is required to meet the building regulations need for a ‘second means of escape’, from the upper level of the flat.

Have you ever heard of any other fire brigades making such stringent demands, and do yu have any advice on how to deal with them?

thanks
Kevin

Kevin, unfortunately some of this is down to interpretation. I suggest you do your own fire risk assessment. If after doing this, you deem the current arrangements to be adequate, then refute the proposals by the fire officers and ask to take this to the Residential Property Tribunal (or your equivalent in Scotland). best of luck! Matthew
ps sometimes the fire service do like to gold plate things so this is why you should do your own fire risk assessment