Nick Garvey MCIOB – Chartered Construction Manager

Investing in a House in Multiple Occupation (HMO) is a popular way to generate high rental yields. However, the process of finding the right property, securing the necessary permissions, and ensuring compliance with legal standards can be complex. This guide combines insights into planning permissions, property requirements, and the importance of professional expertise to help you navigate the journey successfully.

What Is an HMO?

An HMO is a property rented out by at least three individuals who form more than one household and share common facilities like kitchens or bathrooms. These properties are ideal for tenants such as students, young professionals, or those seeking affordable housing.

Finding the Ideal Property to Convert

The first step is to find a property with strong potential for conversion. Some important factors to consider:

1. Size and Layout:

The property should have enough rooms to accommodate tenants while meeting minimum space standards.

2. Location:

• Proximity to universities, city centres, and major transportation hubs is crucial for tenant demand.

• Areas with high rental yields, such as student cities (Manchester, Leeds, Birmingham) or commuter towns, are excellent options.

• Check for Article 4 Direction zones, where planning permissions for HMOs are stricter.

3. Types of Properties:

• Residential homes with large, adaptable layouts.

• Non-residential buildings like warehouses, churches, or shops can also be converted, subject to obtaining Change of Use Planning Permission.

4. Market Research:

Conduct research to identify areas where HMOs are in high demand, ensuring your investment is worthwhile.

Can You Convert Non-Residential Buildings?

Yes, properties like old warehouses, churches, or shops can be converted into HMOs. However, these require additional permissions:

• Change of Use Planning Permission:

You must apply to change the building’s use from its original category (e.g., commercial or industrial) to residential.

• Building Regulations Approval:

Non-residential conversions need to meet strict structural and safety standards, including fire safety, ventilation, and insulation.

HMO Planning Permission Requirements

When Is Planning Permission Needed?

• Small HMOs (3–6 tenants):

Typically fall under the C4 Use Class, meaning they may not require planning permission unless located in an Article 4 Direction area.

• Large HMOs (7+ tenants):

Classified as Sui Generis, which always requires full planning permission.

Article 4 Direction

Article 4 Directions remove the permitted development rights to convert a property to an HMO without planning permission. If your property is in an Article 4 zone, you’ll need to submit a formal application even for small HMOs.

Permissions Beyond Planning

In addition to planning permission, you must also obtain:

1. HMO License:

• Required for properties rented to five or more tenants forming two or more households.

• Ensures compliance with safety, health, and management standards.

2. Building Regulations Approval:

Ensures the property meets fire safety, insulation, and structural requirements during the conversion process.

3. Landlord Insurance:

Specialized landlord insurance is essential to protect your investment and meet legal requirements.

Shared Facilities in HMOs

HMOs often include shared kitchens and bathrooms, which are permissible under regulations. However, these facilities must:

• Be proportionate to the number of tenants.

• Include adequate cooking, refrigeration, and storage space.

• Be designed for easy maintenance and hygiene.

Minimum Room Sizes for Living Quarters

All HMOs must meet minimum space standards:

• Single Bedrooms: At least 6.51 m².

• Double Bedrooms: At least 10.22 m².

• Ceiling Height: Rooms with ceilings lower than 1.5m do not count towards the floor area.

Why You Should Hire an Architectural Designer

Converting a property into an HMO involves complex design and legal requirements. Hiring an architectural designer can:

1. Ensure Compliance:

Professionals ensure the property layout meets HMO licensing requirements, building regulations, and safety laws.

2. Optimize Space:

Architects can design the layout to maximize the number of rentable rooms without compromising tenant comfort.

3. Avoid Costly Mistakes:

Proper planning can prevent errors that may require expensive corrections later.

4. Increase Profitability:

A well-designed HMO can attract higher-paying tenants and improve rental yields.

Steps to Convert a Property into an HMO

1. Research the Market: Identify high-demand areas and properties with conversion potential.

2. Secure Permissions: Obtain planning permission, an HMO license, and building regulations approval.

3. Work with Professionals: Hire an architectural designer to create an efficient, compliant layout.

4. Renovate to Standards: Implement all necessary safety measures, such as fire doors, alarms, and adequate ventilation.

5. Market the Property: Advertise the HMO to your target tenant group, such as students or professionals.

Conclusion

Converting a property into an HMO is a rewarding investment, but success depends on thorough planning and compliance with legal requirements. Whether you’re repurposing a residential home or transforming a commercial property, understanding permissions, engaging professionals, and choosing the right location will ensure a smooth and profitable process.

By following this guide, you can turn your HMO vision into a reality while providing safe and comfortable housing for tenants.