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A house in multiple occupation (HMO),
or a house of multiple occupancy, is a
British English
British English (BrE, en-GB, or BE) is, according to Lexico, Oxford Dictionaries, "English language, English as used in Great Britain, as distinct from that used elsewhere". More narrowly, it can refer specifically to the English language in ...
term which refers to residential properties where ‘common areas’ exist and are shared by more than one
household
A household consists of two or more persons who live in the same dwelling. It may be of a single family or another type of person group. The household is the basic unit of analysis in many social, microeconomic and government models, and is im ...
.
Most HMOs have been subdivided from larger houses designed for and occupied by one family. Some housing legislation makes a distinction between those buildings occupied mainly on long leases and those where the majority of the occupants are short-term tenants.
The definition of an HMO has its origins in fire safety legislation, following a series of publicised, preventable deaths in overcrowded buildings.
Design
In HMOs, bathrooms and kitchens /
kitchenette
A kitchenette is a small cooking area, which usually has a refrigerator and a microwave, but may have other appliances. In some motel and hotel rooms, small apartments, college dormitories, or office buildings, a kitchenette consists of a small ref ...
s are typically designated as common areas shared by all tenants, but contractually speaking common areas may also include stairwells, gardens and landings. Houses may be divided up into self-contained
flats
Flat or flats may refer to:
Architecture
* Flat (housing), an apartment in the United Kingdom, Ireland, Australia and other Commonwealth countries
Arts and entertainment
* Flat (music), a symbol () which denotes a lower pitch
* Flat (soldier), ...
,
bed-sitting rooms or simple lodgings.
Legally compliant HMOs are characterised by a higher standing of fire proofing, after a series of deaths in overcrowded houses. According to the Campaign for Bedsit Rights, three people a week died in fires in houses in multiple occupation (HMOs) between 1985 and 1991.
History
HMOs were principally defined by the
Housing Act 1985
The Housing Act 1985 is a British Act of Parliament. The act introduced laws relating to the succession of Council Houses.Wilson, W. (2014) ''Succession rights and social housing'', House of Commons Research Paper, SN/SP/1998, p. 2
It also facilit ...
, as being "...a house which is occupied by persons who do not form a single household". The
Local Government and Housing Act 1989
Local may refer to:
Geography and transportation
* Local (train), a train serving local traffic demand
* Local, Missouri, a community in the United States
* Local government, a form of public administration, usually the lowest tier of administrat ...
expanded the definition to include any part of a building which:
#"would not
rdinarilybe regarded as a house" and
#"was originally constructed or subsequently adapted for occupation by a single household"
Both the 1985 and the 1989 Acts have since been superseded by the
Housing Act 2004
The Housing Act 2004 (c 34) is an Act of the Parliament of the United Kingdom. It introduced Home Information Packs, which have since been abandoned. It also significantly extends the regulation of houses in multiple occupation by requiring som ...
, which established a more complete and complex definition and also introduced the requirement for some HMOs to be subject to mandatory licensing (see below).
The Housing Act 1985 was a consolidating act. The definition of HMO in section 345 HA85 was from section 129(1) of the
Housing Act 1974
Housing, or more generally, living spaces, refers to the construction and assigned usage of houses or buildings individually or collectively, for the purpose of shelter. Housing ensures that members of society have a place to live, whether it ...
.
The Housing Act 2004 introduced mandatory licensing for large HMOs which were defined in the Act as properties with five or more tenants forming more than one household sharing facilities such as kitchen bathroom and/or toilets over three or more floors.
On 1 October 2018 the Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018 amended the large HMO definition in the 2004 Act by abolishing the "3 or more floors" requirement. Nevertheless, purpose-built flats in a block of three or more such flats, were excluded from the amended classification.
Apart from the statutory definition of HMOs requiring a mandatory licence, local authorities have the power to introduce approved licensing schemes which include smaller HMOs as licensable. Typically these are for three or more tenants forming more than one household.
Section 257 HMOs
The Housing Act 2004 (HA) introduced a classification of HMO under section 257 of that Act which includes self-contained flats in a converted block, where:
* the conversion did not comply with 1991 building regulations
* less than two-thirds of the self-contained flats are owner-occupied
This classification helps bring buildings with inadequate fire and safety regulations under the control of local authority (LA) inspection regimes. s257 HMOs are often expressly included in LA additional licensing schemes for HMOs.
Council Tax
The Council Tax (Liability for Owners) Regulations 1992 provide a different definition of HMO that is used solely for determining
Council Tax
Council Tax is a local taxation system used in England, Scotland and Wales. It is a tax on domestic property, which was introduced in 1993 by the Local Government Finance Act 1992, replacing the short-lived Community Charge
The Community C ...
liability. Typically, the landlord is required to pay Council Tax on behalf of tenants.
Cost for tenants
HMOs living spaces are often smaller but typically cheaper than a one bedroom flat. HMO agreements often include most utility bills with the rent. This is because it is difficult for landlords to apportion the cost of bills to each tenant fairly and it is also more appealing to potential tenants.
Licensing
HMO licensing was first introduced in Scotland in 2000. To be granted a licence under the scheme, properties must meet certain standards, such as presence of smoke detectors and fire doors. These provisions were included in response to a fatal fire at a student flat in Glasgow, which had no working smoke detectors, and metal bars preventing escape through a window.
HMO schemes have been subsequently introduced to other parts of the UK, though the legal definition of what constitutes an HMO varies between Scotland, Northern Ireland, England, and Wales.
Generally In the United Kingdom, an HMO has the following characteristics:
* at least three tenants live there, forming more than one household and
* toilet, bathroom or kitchen facilities are shared between tenants.
Definitions of what constitutes an HMO and a household are set out in the law for each legal jurisdiction.
England and Wales
A home is a large HMO if all of the following apply:
* at least five tenants live there, forming more than one household
* toilet, bathroom or kitchen facilities are shared between tenants
Before 1 October 2018, there was an additional criterion that the building was three or more storeys.
Landlords of large HMOs must apply for a licence and must comply with certain standards and obligations.
HMOs do not need to be licensed if they are managed or owned by a housing association or co-operative, a council, a further education institute or student housing provider, a health service or a police or fire authority.[
Where an Article 4 direction has been applied by a local authority, planning permission is required for the change of use of a dwelling house to HMO accommodation in the area designated. This is usually to protect the housing mix in particular areas of a city; for example in Newcastle upon Tyne article 4 directives have come into force in parts of Heaton, Jesmond, South Gosforth, Sandyford and Spital Tongues.
]
Local authorities
Local authorities
Local government is a generic term for the lowest tiers of public administration within a particular sovereign state. This particular usage of the word government refers specifically to a level of administration that is both geographically-loca ...
, manage and enforce the licensing of HMOs in England and Wales.
Depending on the region of the authority, they have some or all of the following powers, to vary:
* the minimum size of a property requiring a licence
* the licence fee and
* the conditions of the licence.
Penalties in England and Wales
Failure to apply for or comply with the terms of a licence for an HMO constitutes a criminal offence. Tenants may be able to recover up to 12 months' rent from an unlicensed HMO landlord. Since the Housing and Planning Act 2016 (HaPA), tenants can make a Rent Repayment Order (RRO) application directly against the landlord and without waiting for the council to prosecute first (the situation under the Housing Act 2004 (HA)). Some tenants have been successful in recovering rent from landlords of unlicensed HMOs.
Northern Ireland
Northern Ireland is a separate legal jurisdiction within the UK and all HMOs must be registered and must comply with certain standards and obligations. In Northern ireland a property is an HMO if three or more people live in it, these people form at least three separate families or households and at least one person is paying some form of rent to live in the property. New regulations came in to force in April 2019 and a new licensing scheme managed by local councils has replaced the centralised registration scheme. Landlords must pass a fit and proper persons test, fixed penalties have been introduced HMO managers have to adhere to a Code of Practice.
Scotland
Scotland is a separate legal jurisdiction within the UK and all HMOs must be registered and must comply with certain standards and obligations. An HMO in Scotland is a property that is shared by three or more tenants who aren't members of the same family or household. The landlord must be "a fit and proper person" and there are annual inspections to check the property (2006 Act). Hostels and halls of residence for students or nurses are considered to be HMOs in Scotland and the Scottish Government is considering extending the definition of an HMO. At the end of March 2019 there were over 15,600 licences in force and 87% of these were accounted for by the four major cities and the Fife local authority (Aberdeen, Dundee, Edinburgh and Glasgow). Edinburgh accounts for almost two in five of Scotland’s HMO licences due to its higher rents, large student population, tourist lets and young professionals sharing.
HMO investment
HMOs are popular with buy-to-let
Buy-to-let is a British phrase referring to the purchase of a property specifically to let out, that is to rent it out. A ''buy-to-let'' mortgage is a mortgage loan specifically designed for this purpose. Buy-to-let properties are usually resident ...
investors because, it is believed, they have higher income-generating potential than ordinary or ‘vanilla’ buy-to-let properties. By splitting single properties into multiple bedsits that are each let out on separate tenancy agreements, landlords can also reduce their exposure to loss of earnings through rental arrears or voids. While HMOs may generate higher income, HMO investments, at least in heavily regulated Scotland, entail significantly higher initial costs if compared with regular buy-to-let properties due to significant costs of licensing, safety checks and certificates, fireproofing, alarms, joinery and other required remedials.
Controversy
Some argue that HMO investment is necessitated by insufficient housing supply in the UK, whilst others argue that it is exploiting it.
Finance
Due to the additional legal requirements placed upon HMO landlords, many buy-to-let mortgage
A mortgage loan or simply mortgage (), in civil law jurisdicions known also as a hypothec loan, is a loan used either by purchasers of real property to raise funds to buy real estate, or by existing property owners to raise funds for any pu ...
lenders refuse to finance HMO properties. This has led to the emergence of a specialised HMO mortgage market, catered for by a smaller subset of lenders. Because the choice of products is narrower, HMO mortgage borrowers are often subject to stricter criteria. Often they need larger cash deposits, as the average loan-to-value ratio
The loan-to-value (LTV) ratio is a financial term used by lenders to express the ratio of a loan to the value of an asset purchased.
In Real estate, the term is commonly used by banks and building societies to represent the ratio of the first mo ...
is slightly lower than for an ordinary buy-to-let mortgage, while the minimum property value tends to be higher. Borrowers who are financing unlicensed HMOs may also be required to prove that their local authority
Local government is a generic term for the lowest tiers of public administration within a particular sovereign state. This particular usage of the word government refers specifically to a level of administration that is both geographically-loca ...
has no intention to license the property in the future. It is also common for HMO mortgage lenders to levy stipulations on various aspects of the property, including the number of rooms permitted, the type of tenancy agreement and the type of locks installed on internal and external doors.. Commercial Trust. March 18, 2015.
/ref>
See also
* Hostel
A hostel is a form of low-cost, short-term shared sociable lodging where guests can rent a bed, usually a bunk bed in a dormitory, with shared use of a lounge and sometimes a kitchen. Rooms can be mixed or single-sex and have private or shared b ...
s (they may share characteristics with HMOs)
* Rooming house
A rooming house, also called a "multi-tenant house", is a "dwelling with multiple rooms rented out individually", in which the tenants share kitchen and often bathroom facilities. Rooming houses are often used as housing for low-income people, as ...
, for HMOs in other countries
* Student accommodation
A dormitory (originated from the Latin word ''dormitorium'', often abbreviated to dorm) is a building primarily providing sleeping and residential quarters for large numbers of people such as boarding school, high school, college or university s ...
References
External links
HMO Licensing in England & Wales
at the Department for Communities and Local Government
HMO Licensing in Northern Ireland
Northern Ireland Housing Rights
Houses in Multiple Occupation
at The Scottish Government.
Houses in multiple occupation
at Shelter England.
Houses in multiple occupation (HMOs)
at Shelter Scotland.
{{DEFAULTSORT:House In Multiple Occupation
Apartment types