A HMO stands for House of Multiple Occupancy and is a legal term used to denote a property, which is lived in by multiple occupants as their main home.
Houses of Multiple Occupancy are often known as houseshares, multi-lets or shared houses. They commonly comprise of rooms or flats in a large converted property where occupants may share part of the common facilities with each other.Â
HMO’s tend to be found in the areas where other rental properties are found and may be new or old build properties. The standard of accommodation in the past has ranged from poor to average but with recent changes in legislation designed to combat this problem, standards are rapidly improving. The typical HMO has always been considered the student market but there are more HMO’s now aimed at the key worker and executive market.
HMO’s often include the majority of bills within the rent and depending on the standard and market, can include utility bills, cleaning, broadband and sometimes added-value services such as SKY and phone calls.
The main reason for investing in a HMO is because of the good long-term cash flow together with capital appreciation. Typically in a 5 bedroom HMO, 3 rooms will cover the mortgage, 1 room will cover the bills and the 5th room will provide the monthly cashflow.
Getting involved in HMO’s, understanding how to convert a property and make it suitable for use, together with researching the correct location and financing it all require a specialist skill set and knowledge.Â