If you are interested in earning good cashflow from property investment, you need to be aware of the various methods you can use to achieve this. One such method of obtaining great cashflow from property is to use what are known as Houses in Multiple Occupation.

Put simply, a House in Multiple Occupation (HMO)is:

-An entire house or flat that has been let out to three or more tenants who form two or more households and who share a kitchen, bathroom or toilet.

(A household is defined as members of the same family living together).

-A house that has been converted into bedsits or other non-self-contained accommodation and that has been let out to three or more tenants who form two or more households and share a kitchen, bathroom or toilet.

(A self-contained unit of accommodation is one which has a kitchen or cooking area, bathroom and toilet inside it for the exclusive use of the household living within the unit)

If the occupiers need to leave the unit to gain access to any one of these amenities then that unit is not self contained.

-A converted house containing one or more flats which are not wholly self-contained and which is occupied by 3 or more tenants who form two or more households.

For a property to be classified as a HMO, it must be used by the tenants as their only or main residence. Properties that are let to students and refugees will be treated as their only or main residence.

If your property falls into any of the above categories, you may need to apply for a HMO licence. In order to find out whether you need to obtain a HMO licence, you must contact your local council and speak to the Environmental Health Officer, who will advise you accordingly.

Every council has their own guidelines for HMO compliance, so the final answer will depend on the size and location of your property. I always advise my clients to call the council before buying a property that they are thinking of converting to HMO usage.

One simple phone call could save you thousands of pounds as you may find that very little is required to prepare your property as a HMO.

Regardless of your property location, you will definitely NEED a HMO licence if your property

1. has three storeys or more (including usable basements or attics), and

2. is occupied by five or more people, and

3. those people form two or more households, and

4. the tenants share the kitchen, bathroom or toilet.

If the above applies to you and you don't have a licence, then I would advise you to contact your local council immediately as you are most certainly breaking the law.

It will cost a neighbour or tenant the price of a phone call to report you, and this could cost you up to 20,000 pounds plus recoverable rent!

Applying for a HMO licence may appear like a lot of work. However, when you've gone through the process once, you'll find it much easier for any subsequent properties that you purchase.

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