HMO landlords are subject to more considerably more onerous regulation than landlords who let to a single household or 2 sharers. This is because, in the words of the Explanatory Memorandum to the HMO Management Regulations 2006, some of the “most vulnerable and disadvantaged groups in society” live in HMOs, including benefit claimants or those on low incomes, students and asylum seekers.
Whilst landlords get a mandatory licence for a large HMO (5 or more occupiers from 2 or more households), not all smaller HMOs with 3-4 sharers from more than one household require a licence as it depends whether the local authority has introduce “additional licensing” for that area.
However, regardless of whether an HMO is licensable, all HMOs are subject to the HMO Management Regulations. This will extend to the situation where a flat is original let to two singletons, and starts off as not being an HMO, but turns into an HMO if the partner of one tenant moves in. This will transform the property into an HMO, and even if an additional licence is not required, the landlord needs to comply with the HMO Management Regulations.
In this blog post, I not only explain the law relating to the management of HMOs, but I provide lots of practical tips from five experienced and successful HMO landlords about how to manage HMOs effectively, and provide a quality service to tenants: Caroline Pattinson, Louisa Trunks, Sarah Watt, Craig Sullivan and Kim Opszala.
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Landlord guide to HMO management at a glance
- What are the HMO Management Regulations 2006?
- What are the obligations under the HMO Management Regulations?
- Practical tips for the successful management of HMOs
- Final thoughts on the management of HMOs
What are the HMO Management Regulations 2006?
Tony Blair’s government introduced The Management of Houses in Multiple Occupation (England) Regulations 2006, to give the regulations their full name. The government’s intention was to reduce “poor fire safety standards, overcrowding, inadequate facilities and poor or unscrupulous management”.
The HMO Management Regulations apply to all HMOs in England, other than a converted block of flats (a Section 257 HMO), and impose many obligations on the HMO manager.
It’s a criminal offence for landlords and managers of HMOs not to comply with the HMO Management Regulations. First thing’s first, what exactly is an HMO manager?
What is an HMO manager?
An HMO manager is simply the person who “manages” the HMO. They are responsible for complying with the HMO Management Regulations. They may or may not be the licence holder.
What are the sanctions if HMO managers (and landlords) break the law?
If the HMO is licensable, both the HMO manager and the person in “control” of the HMO, ie the owner/landlord, will be committing an offence under Section 72 Housing Act 2004 if the HMO doesn’t have a licence. This includes “additional” licences for small HMOs in areas with additional licensing, as well as mandatory licences for larger HMOs.
The HMO manager (and landlord) also commits an offence if they “knowingly permit” another person to occupy the house, breaching the maximum number of households or persons authorised under the HMO licence, or breaches a term of the licence, unless they have a “reasonable excuse”.
Offences under Section 72 are among the list 7 offences where landlords may have Rent Repayment Orders imposed by the First-tier Tribunal under the Housing and Planning Act 2016. The tribunal may impose a Rent Repayment Order for the landlord to repay up to 12 months’ rent to the tenants or the local authority (if the tenant receives Universal Credit). The 12 month maximum is due to increase to 24 months when the Renters Reform Bill comes into effect. The landlord could also be subject to a banning order, prosecution and a civil penalty of up to £30,000.
It’s also an offence to not to comply with the HMO Management Regulations (see Section 234 Housing Act 2004), without “reasonable excuse”. A local authority can impose a £30,000 fine as an alternative to prosecution, and can also apply for a banning order where the landlord or HMO manager have been convicted of an offence under the regulations.
It’s therefore very important for HMO landlords to take their obligations seriously, and appoint a competent HMO manager (if they don’t self-manage) who has a thorough understanding of the law.
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Can HMO landlords manage their own properties themselves?
There is no reason a landlord cannot manage their own properties. However, managing HMOs is considerably more complex from a both a legal and a practical perspective than managing a single let, so it’s important that an HMO landlord understands the law and practicalities before deciding to manage their own HMOs.
Unlike single lets, the HMOs need proactive, rather than reactive, management. This means being on hand for regular checks. It’s not possible for a landlord to manage an HMO remotely, unless the landlord has a person on the ground who is able to carry out the checks and (for instance) test the fire alarms.
Some councils will require the licence-holder to be accredited, and most will give a discount on the licence if the licence-holder is accredited.
What should HMO landlords look for when choosing an HMO manager / agent?
The most important criteria for appointing an HMO manager is competence, which comes from a mixture of experience and adequate training in the legal aspects of managing HMOs. Look for a letting who specialises in HMO management.
When choosing a manager, ask what percentage of the properties they manage are HMOs, and quiz them about their approach to managing HMOs, and how they think it differs from managing single lets. If they can’t spell it out for you, go elsewhere.
The typical “one inspection a year” reactive approach of letting agents who mange single lets will not work for HMOs. You need someone who understands all the rules to do with HMOs, is organised, and is willing and able not only to plan and implement compliance with the HMO Management Regulations, but also comply with any licensing conditions.
Do not hire an HMO manager who hasn’t managed an HMO before.
Good landlords choose managers who genuinely care about looking after the property and providing a good service for tenants. It’s not just what the manager does, but how they go about it. They need to have the right customer-focused attitude, rather than seeing it all as one giant “to do” list.
Louisa Trunks, HMO landlord and co-founder of Cornish specialist agents, Greenway Properties, advises that landlords look for an agent who not only has experience, but who seems to enjoy the model.
The HMO best agents have their own cleaners, DIY people and even gardeners, which they deploy in the HMOs they manage. Louisa advises that “specialist housekeeping is important. Our housekeepers are also trained to be our eyes and ears, so that small problems can be dealt with swiftly and before they get bigger”.
Student HMO landlord, Craig Sullivan, agrees. He set up his own agency, Hausi, which provides specialist property management services for student HMOs in Medway, after experiencing “inadequate HMO management practices” on the part of other agents.
Finally, make sure there is a break clause in the management contract so that you can terminate it if you’re not happy with them, without having to argue about whether you should be paying a termination fee.
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What are the obligations under the HMO Management Regulations?
Under the HMO Management Regulations, the HMO manager has a legal duty to comply with all the following, which are on top of any conditions in the HMO licence and in the obligations to keep a property fit for human habitation and free from hazards.
Here is a summary of the regulations:
1. Provision of notice with contact details
The manager most place a notice displaying their name, address and a telephone contact number in a prominent position in the HMO. It’s a good idea for this notice to be laminated, and placed on a notice board in the common parts of the HMO.
2. Fire safety
The manager must keep the keep the fire exits, fire-fighting equipment and alarms in good repair. They must also check the means of escape regularly to make sure there are no hazards in the way, such as bikes or appliances blocking the exit. The manager (or “responsible person” for a block of flats) will also need to carry out a fire risk assessment.
Depending on the size of the HMO, there may need to be regular testing of the fire alarms. Kim Opszala, co-founder of KOMO Properties, employs a lettings manager who carries out weekly fire alarm testing in their properties.
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3. General safety obligations
There’s a very wide obligation on the HMO manager to take “all such measures as are reasonably required to protect the occupiers of the HMO from injury” in relation to the design of the HMO, its “structural conditions” (inc. any roof, balcony and windows) and the number of occupiers.
4. Water supply
The HMO manager must ensure the water supply and drains are maintained “in good, clean and working condition”. This includes the water tanks for drinking water, and any fittings such as pipes, cisterns, taps, baths, showers and toilets.
5. Gas and electricity
As for all rental properties, HMOs must have a gas safety certificate each year and an EICR every 5 years. The HMO manager must not “unreasonably cause” the gas or electricity supply to be cut off.
6. Maintenance of the common parts
HMO managers must maintain the common parts so that they are in “good and clean decorative repair, in a safe working condition, and kept reasonably clear from obstruction”. This includes all handrails and banisters, stair coverings, windows, light fittings, fixtures and fittings in the common parts.
Common parts also include any outbuildings, yards, forecourts, garden, boundary walls, fences and railings that belong to the HMO and are used by 2 or more households. Any passageway and staircase leading to the HMO also need to be kept “reasonably clean and free from refuse and litter”. This might include the stairs leading up to an HMO flat in an apartment building.
7. Living accommodation
The room and any furniture supplied by the landlord must be clean when the occupier moves in. Also, the manager needs to maintain the “internal structure”, including fixtures, fittings or appliances in “good repair and in clean working order”, and keep the windows and ventilation methods (eg extractor) in good repair.
However, the manager isn’t obliged to carry out repair damage that the tenant has caused or any damage to the tenant’s own possessions.
8. Disposal of rubbish
The manager needs to ensure there are enough bins for the property, and appropriate storage for the bins, taking into account the service providing by the local council. The manager should check periodically to see if the occupiers are putting the bins out for collection.
Many HMO landlords, for instance, Sarah Watt of Alt Street Property, takes a proactive approach by arranging for their clean team to ensure they have no waste issues. Their tenants put the rubbish into the wheelie bin, and the cleaner takes the general waste (black bin) to the kerb once a fortnight. For the recycling bins, they send a reminder to their tenants by text.
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Practical tips for the successful management of HMOs
Craig Sullivan of Hausi believes that good management is the key to success as an HMO landlord, and retaining tenants. He sees a “direct correlation between poor management, high turnover of tenants, higher maintenance costs, which result in long-term costs and which quickly deteriorates a landlord’s investment”.
So, good management is good for business. Here are some tips on carrying out inspections and whether landlords should include cleaning as part of the rent for HMO rooms.
How often should HMO managers carry out inspections?
As the HMO Management Regulations require HMO managers to keep the living accommodation “good repair and in clean working order” and maintain the common parts so that they are in “good and clean decorative repair, in a safe working condition, and kept reasonably clear from obstruction”, with the fire exits clear, HMO managers need to be proactive to comply with the regulations. They can’t just rely on tenants to report repairs, but need to ensure someone visits the property regularly to check up on its condition.
Whereas single let landlords can probably get away with one inspection a year (although I recommend at least two), and most letting agents only include one inspection as standard, that’s not appropriate for HMOs.
The frequency of inspections depends on the type of tenants, and the size of the HMO, and ranges from once every month to every three months, although some HMO landlords only do 6-monthly inspections for HMO tenants on a joint tenancy. However, the frequency is also linked to whether there is a cleaner (see more below).
Is it a good idea for an HMO landlord to provide a cleaner?
Yes, it’s best practice for HMO landlords to include regular cleaning of the common parts. Whilst it’s not compulsory, cleaners will help landlords comply with the obligations of cleanliness and keeping the fire exits clear in the HMO Management Regulations. They can also carry out fire alarm testing when required.
Case studies for frequency of the cleaning and inspections of HMOs
There’s no one size fits all rule for the frequency of cleaning and inspections of HMOs as it differs according to the type of HMO and the type of tenants. Here are some case studies of the approach that some experienced HMO landlords take:
- Caroline Pattinson has a portfolio of HMOs and has had over 1,000 tenants since she set up Cheshire Homeshare in 2000 (see the above photo of one of Caroline’s lovely HMOs). She arranges for her cleaners to clean her HMOs once a fortnight to help keep on top of issues such as loose toilet seats, removing hair from the waste trap in showers and checking whether the fire exits are clear.
- For Louisa Trunks of Greenway Properties, the frequency of the cleaning depends on the size of the HMO. They clean most large HMOs on a weekly basis, although they clean their 24-bed HMO 3 times a week. For small HMOs (4 or fewer occupants, cleaning is on a fortnightly basis. They also carry out monthly communal inspections, and quarterly inspections of individual rooms.
- Student HMO landlord and property manager, Craig Sullivan of Hausi strongly advises that landlords employ a cleaner for their HMOs, as they’re “worth their weight in gold”. He employs experience cleaners who clean the common parts of the student HMOs he manages on a monthly basis. “They spot the small maintenance issues before they turn into big ones, keeping maintenance costs down”. As for inspections, he carries them out midway through the year and one month before the end of the tenancy. (His student HMOs are let for a year, to dovetail with the academic year).
- Kim Opszala of KOMO Properties is an HMO landlord and property investor with a large portfolio. She provides cleaning as standard for her professional HMOs, on a weekly or fortnightly basis depending on the type of HMO. For her student HMOs, she provides cleaning on a quarterly basis. Their lettings manager carries out inspections every three months.
Record-keeping and following up on inspections and visits
As HMO landlords and manager can be prosecuted under the HMO Management Regulations, it’s particularly important for them to keep clear evidence of regular inspections and visits, including visits by cleaners and maintenance staff.
Having a written record of inspections and other visits with photographs and follow-up actions will be valuable evidence of your compliance with the Regulations in the event of enforcement action by the local council. For instance, if a cleaner notices a bike blocking the hallway, keep a record of the photo of the bike, a copy of the message to the tenants, and a follow up check a week later to make sure the bike has been moved.
Final thoughts on the management of HMOs
The potentially higher gross yields of HMOs as opposed to single lets are very attractive to property investors. However, the running costs of HMOs are considerably higher, due in part to the costs of management, cleaning and compliance, as well as licensing costs for licensable HMOs.
It’s important for HMO landlords to manage their properties well, not just because it’s the law, but also because it helps attract and retain good tenants, and will preserve the value of your investment.
Don’t forget that you need to keep records of inspections, and any follow up actions taken, such as repairs or asking the tenants to do something.
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