How to convert a buy to let property to an HMO

7 min read
Jan 17, 2021
Updated: May 9, 2024

Are you thinking of converting one or more of your buy to let properties into an HMO? If so, you will be addressing the demand for flexible and affordable housing resulting from the UK trend where the average size of a typical household is declining whilst at the same time the population is increasing. Much is made of the additional responsibilities and legal obligations required to run an HMO but doing so also brings with it many benefits if you get it right. 

The Benefits of owning an HMO

The obvious benefit of converting or investing in an HMO property is they can provide much higher returns. With an HMO property, you can generate multiple income streams compared to a buy to let where it is limited. If the property has five bedrooms, this provides five separate income streams. You are less exposed to rental voids if you aren’t able to let all five rooms at one time. Just in the same way if one tenant reneges on their rent you will still receive rent from the other four to cover the costs of the property. There is a likelihood of increased profit from multiple streams of income from one property compared to a single buy-to-let property. You would need to purchase several buy-to-lets to match the cashflow or income from an HMO.

What to consider before starting an HMO Conversion

Your local HMO Officer is a fantastic source of knowledge. Employed by the local council, they are there to help landlords and developers adhere to local HMO regulations. Their advice will be invaluable to help you achieve this. All HMOs require a Licence. These have been put in place to protect tenants’ health and safety. In particular, they help reduce the risk of fire and ensure the provision of adequate facilities for the people living in HMOs. An HMO is a property where: 

  • at least 3 tenants live there, forming more than 1 household. If you have more than 5 tenants this is considered a large HMO
  • you share toilet, bathroom or kitchen facilities with other tenants

You can get more information on the classification of an HMO property on the UK Government websites for England, Scotland, and Wales. Here you will be able to enter the postcode of your property, which will take you to the relevant local council where an application form can be downloaded. HMO licences are generally valid for five years. A separate licence is required for each HMO property you run. You can be fined for renting out an unlicensed HMO.To comply with the requirements of an HMO license, here is a list of what you will need to do: 

  • Provide an annual gas safety check certificate
  • Provide an electrical check certificate that is no more than 5 years old
  • Provide a legionella risk assessment that is no more than 2 years old
  • Have a property with 3 rooms or more with regulatory measurements of: 
  • 6.51 square metres for an adult
  • 10.22 square metres for two adults
  • 4.64 square metres for a child under 10 years old
  • Ensure the property is not overcrowded according to the room sizes
  • Provide adequate cooking and washing facilities for the number of tenants
  • Provide enough rubbish bins for all the occupants
  • Have appropriate fire safety measures in place, including working mains powered smoke alarms for every communal area, as well as all the bedrooms, and a heat detector in the kitchen. There must also be a carbon monoxide monitor close to the boiler. 

How to Convert your Property in line with HMO requirements

Knowing the requirements for an HMO property, allows you to plan your approach, avoiding costly mistakes or ultimately, not having a license granted. A misconception is that planning permission is required to convert a property to an HMO.  However, as long as any alterations you make are within permitted development you won’t need planning permission. If you need clarification your local planning office will be a great source of information. Bringing in a surveyor or architect at this point may also give you additional advice and ideas.Your ultimate goal will be to maximise rental potential, keeping in line with HMO regulations whilst also appealing to the type of tenant you aim to attract. Keep this in mind because there are some factors which may put tenants off. For example, if you extend the building and lose parking space or convert a reception room eliminating any communal living space. Each step should be considered carefully. 

What else do you need to consider for an HMO conversion?

Whilst it’s not a legal requirement it is generally expected that HMOs are furnished. Putting in cheap furniture may end up costing you more in the long run. Investing in good quality hardwearing furniture could help avoid this situation. Also, think about the type of tenants you wish to attract. There is no point saving on furniture only to find the tenants you really want, and their resulting rent, don’t want to stay in your HMO.One of the differences between an HMO and standard rental property is the possibility of higher turnover of tenants. Putting aside a couple of month’s rent will ensure you have enough to cover non-rental periods. You may suffer more wear and tear to the bathroom, kitchen, and flooring. Being ready for this as with any tenancy, means you are able to deal with reasonable repair requests in good time.

Managing the Running of an HMO

There are many benefits to running an HMO, however, legislation on all rental property is getting more demanding. It is imperative for the landlord or letting agent to keep informed and align processes and controls as a result. Making time for the management of an HMO property may be a challenge but with the help of Konnexsion, it will be simplified. We have a property management solution that is designed to manage all operations providing landlords with the following:

  • Real time reporting and full business breakdowns
  • The ability to streamline tenant and maintenance communication using email or SMS through executive dashboards
  • To share important documents with tenants and stakeholders
  • Set reminders for key tasks and obligatory responsibilities
  • Documents and accounts storage in one secure location
  • Access, via the cloud, to everything, anywhere.

For more ideas on how to get organised and increase your productivity, try Konnexsion for a no-obligation trial or demo.