Ask Matthew Your Property Questions

Hi Matthew,

I need your advice. I live in HMO. Originally there ware 3 tenants sharing on AST agreement in 2006. This agreement was renewed by all of us signing it again in 2007. But a year later our estate agents said he would prefer to leave it as periodic agreement to which we all agreed. After a few months my 2 housemates moved out and 2 other people moved in but we did not change names on agreement. Then I was out of work for a few months and we took 2 more people in (on verbal agreement that 2 weeks notice is to be given on boths sides)to be able to keep up with the rent and bills. Then one of the guys’ girlfriend moved in and we kept on living like this for 3 years. I am the only person whose name was on the original agreement, so I pay full rent and all bills and other guys contribute. Now this is my problem. 3 months ago one of the couples gave notice and I found a really nice couple to replace them. On the day of moving the couple who was to move out asked for an additional week and we let the newcomers stay for a week in our living room. Now the couple who was to move out changed their mind and decided to stay but by that time we argued and we do not want them to stay. We gave them a 2 week notice which is going to pass this coming Saturday, but they’re adamant they do not want to move out. They also started threatning us. Since then they went to estate agents and told them there is 7 people living in the house, and also informed the council there is 7 people living in the house (there are 3 names on council tax bill). What can we do in this situation? How can we get rid of these people? If we change the locks – will that be legal, as their names are not on the contract? Will I have any problems with council tax? The couple in question told be I will have tax problems because HMO houses are tax different to other houses – is this true? I can’t find any information on the net. Please advise as I am now quite desperate on what to do.

Hi Matthew,
in addition to my previous note, I have just realised that the couple put a lock on their bedroom door, which is a breach of my contract with the agency. What can I do to get rid of them? I don’t mind moving but I have to give the property back without any occupants.
Please help.

Hi Matthew,

I have a 6 B2L HMO properties, but am getting frustrated by my rate of growth, adding one property a yr to the portfolio. The reason for this is it takes me a yr to get the minimum 20% deposit to get a B2L morgage. I have great demand for my properties and know I could fill more but I can’t seem to get around finding such large somes of money to invest further. I don’t want to currently remorgage my existing properties as the rates I am paying at the moment are very low £200-300 per house. I have been to several morgage brokers and they agree that it would be foolish to take money out the exiting properties at the current time.

Have you any suggestions how I can move forward? I would typically like to buy 3-4 properties this yr. I have tried to do BMV deals without much success, although again the broker advises if we can get 20% off the asking price we wouldn’t be able to remorgage for 6mths and get our deposit out so we still have to find the money in the 1st place.

I have had the suggstion that banks outside the typical highstreet lenders are more accommodating and more willing to lend. However don’t know of any such lenders.

Please help!!

I am frustrated as I seem to keep going around in circles!!

Jamie

Hi Matthew

I understand the concept of HMOs in it’s simplest terms ie. each tenant has his / her own room with shared bathroom and kitchen facility

However, I have noted that some landlords have taken a “step up” and have converted letting rooms into studios ie each room includes a small kitchen area and a shower room (although there could be a shared bathroom)

In your opinion is there a significant extra return from this type of HMO to warrant the extra expense……..notwithstanding that letting rooms would need to be somewhat bigger anyway, hence a bigger property would be needed for the same number of tenants

Also, what is the minimum size room you would expect to see for a standard HMO letting room?

Thanks, Peter

Hi Matthew
Great section! 3 quick questions
1.Do you know who is offering 70% LTV for HMO’s?
My brokers can only offer me 60%
2. Are there investors interested only in HMO’s?
I am looking for £92k for 9 months at 10% return
3. Where do you advise buying furniture packs

Thank you for your help, I hope to meet you soon

Francis

Hi Matthew,

I am new to this blog but need your advice as follows:

I own and rent a property in Yorkshire. My original tenant, a couple on a AST and claiming housing benefit split-up and one of the tenants left the property. The remaining tenant asked me if his parents to move in and rent the property with him. The parents were on housing benefit at another property and they checked with the LA that they could do this. The LA confirmed that this would be fine but they needed to provide tenancy agreements. The tenants and I checked independently with the council that this would not require the property to be defined as a HMO – though nothing was confirmed in writing [remiss of me].

I gave the tenants two seperate AST agreements, both stating that they are responsible for all bills and utility costs. The LA accepted these agreements and paid the council tax and council tax for the tenants for some 14 months.

However the single tenant obtained a temporary job over Xmas and as such all housing benefits ceased. He didn’t tell me or notify the LA. As a consequence he did not pay me the rent and received a council tax bill for the period that he was in work. Once the job finished he again claimed housing benefit and all went back to normal. However the LA then determined that the property was a HMO and have sent me the council tax bills for the 14 months [plus this years 2011/12].

After further investigation I discover that if the property is determined a HMO the LA may have the legal right to recover all rents paid, all council tax, and I may be liabel to a fine up to £20k! As you can imagine I am now having sleepless nights!

My questions are:

1. Is the property a HMO or not? [Related tenants with separate AST]?
2. What is my council tax liability?
3. Can the LA reclaim the rent paid from me?
4. Am I likely to receive a fine?
5. Moving forward [and with hindsight] would it have better to have used a single AST [single household] and if so how would this have affected [or affect moving forward] the housing benefits of the tenants?

I would really appreciate your urgent advice.

Regards… Adrian

Francis, commercial finance can in some cases go to 70% but generally we are seeing 60% LTV’s at the moment but on yield – not bricks and mortar.
You should go to networking events to get finance.
We supply our own real-wooden furniture, just email us for a quote and we will send you details through.

hi Adrian, sorry for delay.
OK any property where two or more unrelated households are sharing is a HMO. As the sharers are all related, it is NOT a HMO.
However, they do have seperate AST’s which from the LHA point of view – may make it a HMO (they have different classifications).
Council tax lies with the tenant if this is stated in the contract.
Yes LA can reclaim rent if they can prove that the rent is reclaimable – this is something that need further investigation.
No, you won’t get a fine as its not a HMO.
Yes use a single AST for a single household – you should have made amendment to original ast or drawn up new one to have them all on as wholly liable.

Hi there,

I hope you’re well.

Am I right in understanding that EVERY HMO needs to be managed but only certain ones need to be licensed (3 floors and more than 5 people).

I would really welcome some clear expert advice on what needs to be managed and what needs to be licenced!!

Regards,
Alex

Hi Matthew,

I have a query that I hope you can answer, my son was renting a HMO property in Dundee, he was working part time and was sharing with 2 full time students, I have been in touch with the LA regarding council tax and they have said that the landlord is responsible for this. The cost of the council tax was not included by the landlord in with the rent. He has been unable to provide me with a copy of the council tax bill for the year and when I pushed him he said that he had a bill but it was showing zero. Could you advise if the 3 tenants are liable for the council tax or are the 2 students exempt completely and the part time worker has to foot the bill.
Your advice will be greatly appreciated.
Many Thanks
Linda

Hi Matthew,

It seems HMO status can drastically reduce the price that potential buyers are willing to pay. In my case the price reduction is around 40%.
This apparently results from the limitations which Councils impose on development plans.

As you can probably imagine, I am not a fan of HMO legislation.
Is there any way of getting HMO status revoked in order to overcome this problem?

Thanks.

Dennis

Hi Matthew,

I am really keen to get started in HMO investment. I have seen some properties and want to make sure I have got the basics right.

I am in London and looking for HMO’s in my surrounding nearby towns. Some houses I have come across to, are adjacent to shops or in one example next to a taxi cab company. Should such properties be considered?

How do I invest in HMO’s outside London (as these definitely provide a much higher cashflow yield) – given that I wont be able to manage them as they will be beyond my reach ?

Look forward to your reply.

Kindest Regards,
Abbas

please send details of real wood furniture packs supplied by your company

Rajesh Sharma

Hello Matthew,

I am a student living an an HMO (8 tenants). We have all signed individual contracts and each of us has a guarantor.
I am expected going into my last year of university and unfortunately, I did not pass my exams and will not get any finance to pay the rest of my contract. Now, I have found a tenant that can replace me. So I am aware that there is a possibility than the action of ‘deed of assignment’ can take place. However, do the other tenants in the property HAVE to approve of the new tenant, or is it more important that the landlord is to be paid?
I hope you get back to me soon.
Kindest regards.

Hi Matthew,

I have been asked to find a buyer for a colleagues HMO and I am not sure where to start. I have sold BTL property before but never a HMO. Where should I start? I dont really have clients or contacts who would buy this sort of investment so probably need to throw the net a bit further.

Many thanks,

Martin

Hi,

I am considering letting my 4 bedroom detached house (standard not three storeys) out to 5 professionals. There is one couple and 4 friends.

Two reception rooms downstairs and seperate kitchen. 4 bedrooms upstairs.

Do I need a HMO license ?

Thanks

Gareth

Gareth – this depends on the area!! You need to talk to your council to find out – generally it would not be but speak to your council! Where is it?

Martin, we can source for you if you wish – its a complex area but you need to understand the Housing Act 2004 and the Amenity Guidelines in each area you are sourcing. Hope this helps.

Think as long as landlord gets his money you should be fine!!

Hi Matthew

Basically I need help. I have a 3 storey property that I used as 3 flats but the conversion does not meet building regs. The council came round in 2004 and classed it as 3 self cont flats for council tax purposes. this was rented out to 3 separate families each with their own council tax. In 2005 housing enforcement told me I had to bring it up to standard and licence it as a HMO and I did. However council tax continued to be charged as 3 flats. In 2009 flat 3 was rented out to a brother and sister and council tax declared it a hmo even no further adaptions on the basis they used it as bedsits. I did not authorise this and I got charged the council tax for flat 3 only and tenants for the other paid their council tax. In 2009 I asked why I was being charged as 3 flats when the house was a hmo. Nothing changed and they gave no viable reason. In September 2011 I had enough of the council so I decided that I would rent it as a single unit to one family. I arranged the tenancy agreement but now the council are saying it is still 3 flats and continue to charge. I have told them there is no building regs and no planning permission for conversion to flats but they still argue. I have no told them that they are going to make the current tenant homeless if this is not resolved. They have told the tenant that they are now liable for the council tax for all 3 flats. I explained that they cannot be liable but they dont want to listen so now I want to sell but wont be able to sell as 3 flats can you advise if they are acting within the law.

Thanks

Colin

Colin, it would appear to me that the valuation department have incorrectly valued it as 3 flats (which is perhaps what is was) but in 2005, you changed it to a HMO. You should have then at this point gone back to argue the point. If they are bedsits and self-contained, its hard to argue this point though!

Hi Matt,
I have a HMO 3 stories 5 room house and im in the process of getting it licensed, i was wondering about the utility bills,

which of the following scenarios can i do?:

The house on pre-pay meters paid by the tenants.
I pay the bills myself and add it into the tenants rent.
or
I pay it myself and bill the tenants each month when i do readings?

Hi, four of us have been looking for a place to stay for next year and we’ve found a 4 bedroom house that doesn’t have a HMO licence. However, the landlord is willing to rent it to us, knowing there will be four unrelated people living there, if only two of us sign the lease.

Now if we were caught what would be the the repercussions? Would the landlord simply be forced to evict the two not on the lease or could we face prosecution?

If it’s simply a case of two of us getting kicked out we’d probably be happy to take the risk as we’re all relatively quiet and the house is down an alley with offices on either side, so we’re unlikely to draw any unwanted attention due to noise etc.

hi Robert,
just because its a HMO doesn’t meant to say it needs licencing. Licencing is for specific types of HMO;s – ie 3 storeys or certain types in large university towns.

You can find out from the council if it needs licencing by ringing them up. But sounds like as long as it has a fire system and fire doors in and its a 2-storey building that it should be ok.

But always check with the local council.

Hi, I am a student and I have a few questions whilst I am flat hunting.

Essentially, Me and 2 friends are looking for a flat to rent for the next academic year. We are looking for a 3 bedroom flat. If its only the two of us paying the rent and signed on the contract and essentially the third person is a visitor (not paying rent/amenities) do we still need to be searching for flats with HMO’s ??

I dont know if you know but all the flats with HMO are somewhat…substandard to those without.

Thanks

Joe

Hi Matthew

thank you for the great site.

I am looking for HMO finance of 70% LTV

Are you aware of any lenders not requiring ownership of property for 6 months prior to lending.

Many thanks.

Ram

heya, hope you can help

5 professionals, having to move out and we were hoping to move into 4 bedroom apartment (kitchen has a large dining area we’re hoping to use as our communal living space). this flat is on one floor but in a victorian mansion block of possibly 5 storeys.

is there any loophole to make it ok for us to live here? i understand that for the mandatory licence, it becomes viable when 5+ people of more than one household live in accommodation comprising of more than 3 storeys, but our apartment is solely on one floor rather…is there no room here to get away with this?? the mansion block appears to be very well kept so presumably mostly lived in by owners. estate agent said that the living room doesn’t have to be the living room so long as there are 4 names on the tenancy agreement.

please advise!!

thank you so much

tash

Hi I think by renting spare rooms in my flat out I may well have created a mandatory licence hmo? Low risk? 2 story, 5 bed room, lounge, kitchen and two bath/shower rooms.

There are currently 5 sharing on seperate licences..

I have wired heat(kitchen) and smoke detectors(us/ds), all regs app, gas elecy certs, fire doors where regs required, one 5kg co2 kitchen plus blanket, one 5kg co2 upstairs lounge, one 6l foam spray main entrance hall new and serviced.

I have seen a licence fee is 297 initial and 3yr 200.. 165.66 pa.

Are there any things I would need to do to meet requirements of a hmo under these conditions?

What would the council tax liability be, mine i suppose to collect but what would liverpool council charge I’m exempt normally thru diability, 3 are students from abroad (not their main home?)one working?

Area is fairfield L7, i have seen different areas treated differently apparently?

Any help or advice much appreciated.

Chris

Hi I am actually looking to sell a property in Margate, Kent. Originally it was a B&B with 10 bedrooms and we ran it as an HMO and had the licence. It also has planning permission to convert to 3x 2 bed flats. We have since moved abroad and would actually prefer to sell now. Any idea on where we could Market it? Thanks Sam

Can anyone advise?
I have a house in need of an HMO licence. The house is updated with all alarms, lighting and fire doors etc.
There are five good tenants on one contract.
My form is filled in but I have noticed that they want the details of my buy to let mortgage company.
Will they write or inform my mortgage company of my request for a licence? If so I am in trouble as
Moving mortgage companies now will be expensive and I do not have the funds.
Any one been in the same boat? One snag that I did not anticipate could now blow my plans.

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Hi great site.
Could you please email you furniture packs info please.
Also if you let your who;e house room by room all inclusive do you have to pay four lots of council tax.Say for example the family home next door pays 1200 a year do you then have to pay 4800 per year because you have four individual tenanat. if all rooms are let for the year that is.
Thanks for your time and look forward to hearing from you

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Hi Matthew,
I presently have a HMO licence for 6 occupants in a property in Wandsworth.I am looking to increase the number of occupants to 8 in the same property (there are more than enough facilities to do this).What I wanted to know is will I have to reapply for the licence again , what additional requirements the council will need or can I go ahead and put 2 more in ?
I do need advise ASAP please.
Thanks

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Hi Matthew,

I have recently sold some sing let properties and have a good amount of cash to reinvest. I can see HMO’s are great for cash flow, but i find the HMO’s complex and i don’t want to make a mistake if i invest.

I was sent details of 4 HMO’s only today, which mentions the title being a 30 year lease (which seems extremely short) and a Head rent of £7750 (with possible uplifts) I had thought HMOs were freehold investments.

Could someone explain the above to me, as there are 4 of these properties being sold on behalf on another investor and from what i’m seeing they look like bad investments (but then again i’m not an HMO expert) 🙁

Regards Nigel.

hi Nigel – apologies for the delay in response.

Yes you can buy both freehold and leasehold investments. As a general rule – if it stacks it is fine – if it doesn’t stack then regardless of how appealing the deal is to you personally – step away!

If you let me know where you are thinking to invest – I may know someone in the area that can help you – or send me an email for a free 1-2-1 consult.