Ask Matthew Your Property Questions

Hi Matthew

I am an investor who like many others cannot access funds to purchase the normal way, would you recommend to use a ‘Lease Option’ on a potential HMO project? How much money would you need to put in and what are the potential dangers of doing a ‘Lease Option’on a HMO?

Cheers

Andy

Hi Matthew

Am in the process of buying a 3 storey victorian terraced house for about £75k inc all fees.

I plan to put 2 bedrooms on the ground and first floor (i.e. 4 double bedrooms in total).. and have the kitchen /toilet in the basement.

A bulk standard HMO room in Derby gets about £55pw. If bills are £100 per person per month and the mortgage is £400 pcm this it not going to cashflow particularly well.. and may in fact just break even.

What strategies could I employ to make this more cashflow positive?

Thanks Matthew
Paul Bromnick
07970 572365

p.s. the main bathroom will be on the first floor…

Hello Andy, lease options can be a great way of getting a HMO. Main thing to avoid is one that needs to be licenced so speak to your council first! Other than that, the pitfalls are the same as any lease option so do your homework carefully and have a good solicitor.

Hello Paul, simple! You get us to manage it and we will achieve much higher rents for you (average of £350-380 pcm). I say this because our Derby operation is expanding rapidly and our houses are all ACCREDITED PLUS with Derby City Council.

Hi Matthew,

I have a couple of of HMOs with utilities such as gas and electricity included in the monthly rent. The tenants have the heating on all day and night, and open windows when it gets too hot. Can you recommend a good tamper-proof timer for the boiler to regulate central heating times? I use a combi Worcester 28i. A feature that will allow tenants to extend the settings by say 2hours at the touch of a button would be fine (allow some flexibility), but just not to have it running 24/7.

Greatly appreciate your ideas,

Ian

Hi Matthew

I’m exploring the HMO potential of a particular area in Bristol – I recall reading of a ‘deal analyzer’ on your webiste….but can’t find it anywhere……can you help?

Regards

George

Hi Matthew

You said

“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’ve never heard this! Please be a little more specific as to which law you refer to.

Cheers

Bel

Hi Matthew,

What is your view on the latest announcement on 27th January 2010 by John Healey (Housing and Planning Minister) that he intends to introduce new local powers to control the spread of Houses in Multiple Occupation (HMOs).

HMO’s will be given their own Use Class and thus will need to obtain planning permission. Alot will depend on the new definition of HMO under planning which is due to come into effect in April 2010. If its 5 or more then we should be OK, if the government decides 2 or more make a HMO under planning, then we are up against it.

Hi Matthew,

At the Ramside presentation you mentioned that a free subscription to ‘Property Network Magazine’ is available on your website.

Could you advise where this is located. Thank you, Miles

Hi Matthew

I find your resources to right on the money exceptional don’t mind me saying so.Have a 6 bed HMO property in Liverpool currently looking to put the required fire doors,alarms,emergency lighting and other necessary safety requirements in place so everythink is in order. Thought you might be kind enough to maybe share if know any reputable companys who do similar services or maybe all in one package.Realise this going to be very expensive and not made of money ha but need to make everythink above board bit by bit.Any info be much appreciated.When is your next available workshop 2010 doing any northwest.

Kind Regards
Paul

Ian RE boilers, get it all on timers and then allow them to have an advance button OR put in a dimplex system to regulate the heat 24/7

George, I will email you the deal analyser one as its not on the site directly

Bel, RE the periodic tenancy, I am not sure of the exact law but its something that has been around for ever. I will investigate and write a blog on it.

Nav, RE the change of use in planning class and the new licencing laws, its utterly ridiculous! Go and make sure you join the NLA/RLA petitions and when I’m on BBC next, I will mention it!

Miles, RE Your Property network, you can access the guys website at
http://www.on2url.com/app/adtrack.asp?MerchantID=132486&AdID=464577

hi Paul, thanks for your comments! On fire safety, I only recommend Digitek, give Sam a call on 0116 2761162 and tell him I sent you. They don’t do fire doors but they do everything else and very reasonably!!

Hi Matthew,
My husband and i own a house (3 storey) and we are looking into converting it for multiple occupancy, i have had a read of your site and know i need a license. Is there any bible so to speak to take us through each step from conversion to letting?

kerrie

Hi Matthew,

Just wondering if you can give me some advice. I have a property which is currently occupied by two tenants who are friends. The council has now started to bill me for the council tax stating that as the property is occupied by two unrelated people it is now a ‘HMO’.

Every piece of legislation and law I can find states that to be a HMO a property must be occupied by two households made up of at least 3 individuals, but even after taking this proof and the relevant housing act sections to the council offices they are still saying the house is definately a HMO and I, as the landlord am now responsible for the council tax, is this correct?

Matthew,

I saw your talk at the London PIN which I thought was very informative. you mentioned you had a Fire Alarm company in Leicester you used for HMO’s can you give me their details. Thanks. Mike Frisby.

In response to the above question of HMO’s and council tax. I had the same issue, I then put the 2 people onto a single AST where they were jointly and severally liable and then my council tax dept were comfortable to charge the tenants the council tax rather than the landlord which they had previously done.

Hi, Matthew,

After London PIN, on 25th May I sent an email to Arthur Kemp at pin@hmotax.co.uk re: CA Tax relief, but have not had any response. i have also left several messages on 01733 248 706. Please let me know if there is any other way of contacting him.

Kerrie, the best advise is always to talk to your council and fire officers. In terms of a bible, not really but have a look at http://www.hmosecretsworkshop.com where we reveal everything you need from A to Z.

Josephine – do they pay an all-inclusive rent or rent plus bills? THis really dictates who pays the bills not the council. Have you ever heard of a person in a flat asking the landlord to pay the bill?!

Mike, please send me an email directly via the site. cheers Matthew

Hi Snezana, I will chase him but I know Arthur has been busy running around the country so this may be why!

Dear Mathew,

I’m having terrible trouble finding a decent BTL management company in Hull, East Yorkshire.

Please could you recommend a good company or give me advice on how to find one?

Many thanks in advance for you time with this.

Best wishes,

James

Hi Mathew

I really enjoyed your talk at the PIN meeting last night… and have already signed up for your 1 day course in London!

I wonder if you could clarify one thing for me. You stated during your talk that on rightmove that day you had found a 6 bed property in Bournemouth for (I think) £90k(?) When I queried this with you after your talk you said it came up when you entered “5 bed minimum in Bournemouth”.

As soon as I got back I went looking for this but apart from a very short term lease (5-6 years) on a hotel I can’t find anything like this deal. Would you do me a favour and check this again and if you can find the property you were refering to – send me the link.

Many thanks… Tony

PS. I look forward to seeing you again later this month

Matthew,

Many thanks for the information provided.

I have some questions for which I would appreciate your response:

1. In your opinion how much capital is required to set up a HMO business from scratch (ie assuming a 5 bed property with a property purchase price of 200k-250k) to cover costs such as deposits, professional fees, renovation, refurb, kit out, advertising for tenants etc
2. In your experience once operational how much time does it take to manage a “typical” HMO
3. The services and associated costs of working with yourselves to support me during and after purchase of my first HMO

I am happy to purchase the HMO Survival Guide, but it looks at though is was written in 2008… is there an updated version available?

I look forward to your reply.

Best regards

Simon

James, sorry but we are not in HULL yet otherwise I would recommend you get in touch with us. So, try and find one that is registered with a body like NALS, ARLA etc then pick the best one that offers best service. What is it your after exactly? We could provide leads for Hull but not viewing capability right now although I know a few guys in Hull that might be able to do this!

Tony, I looked on rightmove two hours before the event. It was on rightmove – it could have been the hotel but I think I had a quick look and it looked as though it was a normal resi property. Look forward to seeing you at the weekend.

Simon, 30% deposit plus buying costs plus about £15K per HMO. Takes about 1-2 hours max a week to manage. In terms of services etc, best thing to do is to come on the 1-day workshop (http://www.hmosecretsworkshop.com) or call the office on 01604 521305.

The 2008 HMO Survival Guide was written in December 08 so its still valid. The 90 day plan still works. Finance has changed as had planning law but we do cover this on the blog. Otherwise, you could come on the 1-day event because we give you part of the upgraded Survival Guide on the day as a free bonus.

Hi Matthew

My father and I are looking into the purchase of an HMO in South West London and trying to get an idea of our outgoing costs.

We have contacted a few management agents about managing the building for us but we don’t know what is a good rate in terms of their fee.

Please could you provide some advice!?

Thanks

hi Steph, the management fees will vary but budget for 12-15% + VAT plus around £150 per tenant found.

We know some good guys in Hayes, Hillingdon if you are in this area who may be able to help.

hope this helps
Matthew

Hi Matthew,

I have been looking through the articles and comments on your site but am still unsure where that leaves me in terms of my situation:

I own a 3 bedroom flat (1st floor) in Glasgow, where I currently live with 2 tenants. I am going abroad for a year or so and am going to let out the flat as a whole to one of the tenants. He is going to rent out the other two rooms while I am away to help with costs and bills etc. The flat has one main bathroom (toilet, basin, bath & shower), 1 en-suite bathroom (toilet, basin, shower) and a shared kitchen and lounge. The three bedrooms are all double rooms with large fitted cupboards. The question is would this be regarded as an HMO property? If I am renting the whole flat out to one person and then they sublet two rooms, I wasn’t sure if this would qualify…

Any advice would be much appreciated.

Many thanks,
Leigh

Leigh, best thing to do in this instance is speak with your council. Am aware in Scotland that any landlord requires a licence and you may need a HMO licence also.

Hi Matthew

Here’s a question for you.

I have just finished refurbishing a HMO in Yorkshire for a client and have managed to find him 4 professional tenants paying £95 inc all bills per week.

I personally cant get finance at the moment so what I was thinking was to RENT with a possible option to buy a similar property to the one I have refurbished and in a similar area and sub let each room to professionals or working people. To one family rent of £750/850 is asked for, however I believe I could get £1600 per month less running costs.

Have you come across this strategy before, what’s its downfalls and do you think it is financially viable?

I look forward to your reply.

Thanks

Andy

Hello Matthew i am a 17 year old who is intrested in getting into property. I am on £95 a week what can i do and where would i start ?

Andy, this is a great strategy and one of 3 creative strategies that we discuss on our HMO Secrets Workshop (http://www.hmosecretsworkshop.com).

You don’t need a lot of cash to invest in HMO’s (you will need some) and this is one that works all day long. Good luck with it!
Matthew

Ian,
You need to begin with a plan.

You don’t need a ton of cash to invest so the key thing right now is to begin by creating a plan for your investment goals, then setting down with a property expert to help you formulate this in more detail.

Good luck – I look forward to hearing positive things from you!

Hello!

I am thinking of letting a two-bedroom council estate flat (which I own on a leasehold) to 3 students, using the living room as another bedroom. There’s a big kitchen which I will use as a living area and the kitchen itself. How likely, do you think, is that I will need a planning permission for that?

And, in the light of latest changes in HMO regulations (April 2010), will I need any hmo-related licences if I let a council estate flat to tree people? The council is Southwark, London.

THank you!

hi Eugene, the best bet is always to contact your council. They will give you the latest guidelines. You shouldn’t need permission and you shouldn’t need a licence but I say that generically, it may be different in your part of London.

Hi Matthew
I live in Perth, Western Australia and have owned a HMO in Blackpool which has 6 flats. I just received a letter from the Prop Mger saying that the Fire Safety law changed in 2005 and we now have to have an independent assessor conduct a fire risk assessment to identify the fire precautions we need to put in place.
The charge for this is 100 pounds each flat – 600 pounds in total.
Seems very high although he tells me they give us 28 page report and takes them 1 day on site.??
Is this all so if so, do you know a cheaper option to comply?
I follow your site regularly and when I’m ready to purchase more properties I will definately be in touch with you first for advice.
Have a great day.
Regards,
Tony

Hi Matthew,

Interested in your HMO workshop, do u have a list of dates/locations ?
I live near London.

hi Tony, thanks for getting in contact. The thing I’m not clear on is your HMO a single building which has been converted into 6 seperate dwellings (ie studios with kitchenettes/bathrooms in) or are they flats that share a communal area?

If they meet the 1991 building regulations, then they will comply and will not be treated as a HMO – if they don’t, then yes you may need a Fire Risk Assessment.

The charge is quite high. This report would generally be done for one block (ie when we do a report its for a house with up to 8 units in) and it probably would take about a day in total including writing it up as it is a lengthy process. But I don’t think you need to have one done per unit so this may be your starting point in getting it done cheaper – locally we do them but for around £250 for a complete report. Hope this helps. If you have any investment monies available now, we can start building a 1, 3, 5 or 10 unit portfolio for you which will snowball in 10 years to around £1 million in EQUITY and c. £50K income (passive!)

hey Zeb, next dates will be in 2011 – will post them up here!

Hi Matthew,

I was wondering if you could help me. I recently order your HMO survival guide but the link got put into my junk folder and expired. After several attempts using the email address for any issues I have had no response and this is over 2 weeks now. Are you able to facilitate a new link being sent to me please.

Cheers

hey Demetris, I’ve had someone from the office email you to sort this out. tks Matthew

Hi Matthew,

any news on the course dates for 2011? Very keen to get started as soon as possible! Have had some good success letting basic properties but now want to take things a bit more seriously.

Great site BTW – very informative.

Regards,

John
Leicester

John, the calendar is going live soon – first workshop end of the month – sorry for the delay in responding.

Dear Matthew,

My father is looking to sell the property we live in, but since we have a HMO on this property, the estate agents are telling him to get rid of the HMO by releasing a few tenants (at least the two rooms which share common areas such as a kitchen or bathroom).

The house has 6 units (4 bedsits, 1 en suite bedsit and 1 self-contained flat). 2 of the bedsits we occupy, share one bathroom with 2 other tenants but have our own kitchen.

The rent from this property is my father’s only income and since I only just graduated and my mother is a housewife, it’s also our only family income. So if we get rid of two of the tenants (worth £750/month in rent) before we put the property on the market, we won’t have enough to live on.

This rule seems ridiculous since this is my father’s only property and only source of income. My parents want to sell this property, move back to their country of origin, India, buy me a smaller flat here, and invest the rest of the money is some mutual funds.

Please tell me if getting rid of the tenants is really the only option, in which case it wouldn’t be possible till I find a job and can look after the family for a few months. Of course we don’t know how long the sale of a house evaluated at £500,000 will take (what do you think, 6 months?)

Secondly, why is it that banks won’t lend mortgages on properties with a HMO? I mean say someone bought our property empty, they could fill it up with tenants straight away to earn some money. Isn’t that the same thing as buying the property with existing tenants? As far as the bank’s interest goes.

Sorry for the length, and I hope you can answer all my queries. Thanks for your time.

Hi Matthew,
Looking at the numbers a loft conversion (say £15k) in a terraced house would take an existing 2 floor non-licensable HMO to licensable status, but the additional rental incvome would pay for the costs. In your properties and expert opinion do you consider this cost and additional effort worthwhile or would you think it is better to put the £15lk spend towards the next HMO purchase? I have used £15 as an arbitrary figure but would you assume any different ‘average’ costs for loft conversions?

Many thanks
David

Hi again Matthew,
On the mortgage side due you go for a commercial buy to let mortgage for your properties or a standard buy to let loan. Some of the latter specify no students as tenants however in talking to people I get the impression some people ignore this condition, go ahead with the standard loan as it is cheaper and student let?

Regards
David