HMO Conversion Essentials… What You Need to Know Before Converting

Whether you’re a new landlord looking to buy a property to convert or an experienced investor planning to convert a current investment property into an HMO, you need to be aware that conversions can be challenging, as well as rewarding.

Of course, the many benefits of converting an existing property to an HMO include:

increased rental return
multiple tenants leading to a reduced risk of vacancies
tax advantages with a reduction in VAT
potential increased property value
creating affordable accommodation for tenants

…however, there are some essentials you need to know before you consider converting an existing property to an HMO.

Depending on the features of your property, converting it into an HMO can be a compelling investment with very profitable rental yields, but it does require more work and maintenance.

Essential 1: Is it the Right Property?

The first essential item to consider is whether the property you want to convert will be compliant, able to get an HMO licence and provide solid rental returns.

The types of properties that can be converted include a wide range of property types, such as:

three-bedroom single occupancy residential homes
former police stations
former fire stations
collection of shops
former churches
old factories
former private hotels

The key is finding a property in the right location (close to busy student areas or close to good transport connections), has several rooms and communal areas, and the rooms comply with the minimum HMO room sizes.

Essential 2: HMO Licensing

The following essential item is ensuring that your HMO is compliant to receive the correct licence.

Contact your local Council to check if your property needs to be licenced and what requirements are involved. Or you can speak to us. We provide our clients with an HMO Licensing service, which includes applying for the local Council’s property licensing scheme on their behalf.

The HMO licence will need to ensure that the property:

is safe for tenants to live in
is in good condition
has an adequate number of smoke detectors
has appropriate fire exits
has enough sinks, cookers, baths and toilets for the number of tenants
is well managed

Essential 3: Compliance with Safety

There are various safety compliance measures you’ll need to meet to let an HMO. This includes:

getting an annual gas safety certificate
installing the required number of smoke alarms and carbon monoxide detectors
installing fire doors
getting safety certificates for electrical appliances
keeping exits clear from obstructions and marking fire exits clearly
providing emergency lighting for fire safety
locks for each bedroom/flat
emergency lighting
keeping pest control treatment records

Essential 4: Hire a Professional Team to Renovate Your Property

You may need to renovate your property to make it suitable for three or more tenants from separate households to rent. The key is to provide enough space, a good layout, the proper facilities, good furniture, and reliable appliances.

To do this, you will need to hire a professional team to help you undertake the renovations. This includes:

Architect
Heating engineer
Electrician
Project Manager/Builder
Painter/Decorator
Scaffolding team
Carpenters
Bricklayers
Roofing experts

Whatever renovation works are needed, remember that you may also need planning permission from your local Council.

Essential 5: Set a Realistic Budget

Before you start, do your research. Create a budget to plan for all your costs – renovations, safety inclusions, licence, etc, before you decide if converting to an HMO is the right for you.

For example, you will need to include the following costs into your conversion budget:

Provisions for fire doors
Planning permission submissions
Compliance with fire regulations
Property renovation costs
Professional consultants’ costs, which includes the Architect, Engineers, Specialist Consultants, Quantity Surveyor
HMO licensing fee
HMO planning application fee
Council tax application fee
Furniture
Insurance
Solicitor fees
Property management fees
Lending costs
Certification costs – which includes safety and energy certificates

Talk to HMO Conversion Specialists, HMO Letting Agents, and your local Council. Research what is involved and compare the additional investment needed against the additional profit you’re likely to make.

Our HMO Promise

As specialists in HMO conversions since 2006, we promise you:

1) On-time and on budget completion regardless of the size or condition of your property.

2) You’ll be kept up to date at all stages. Communication is our key to success.

3) There’ll be no surprises and no excuses. We deliver what we say we will.

4) Your HMO conversion will be compliant, and you will receive the HMO licence

5) Rental returns of three times your current monthly rent (some of our clients achieve up to five times increase)

Next Steps?

If you want to know if your single dwelling house can be converted to an HMO, call us on +44 (0) 203 286 6468 or email us at HMO@RekaProperty.co.uk.

Regards
Douglas Fokuo
Director