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HMO Property: A Guide to HMO Insurance

An HMO property stands a little apart in the rental market. Unlike standard rental properties, it is governed by more rigorous legal requirements, which places more responsibilities on the landlords or managers in charge of them. HMOs are also seen as higher-risk, which means a tailored HMO Insurance policy is needed to provide the right cover.

Understanding what an HMO is and the insurance needed for its specific risks can be a little complicated, so if you’re a landlord of an HMO property or are thinking about investing in one, this guide may help. 

What is a HMO property?

What does HMO stand for exactly?

HMO means House in Multiple Occupation. 

A property is a house in multiple occupation (HMO) if both of the following apply:

  • at least 3 tenants live there, forming more than 1 household
  • a toilet, bathroom or kitchen facility is shared by the tenants

Your property is a large HMO if both of the following apply:

  • at least 5 tenants live there, forming more than 1 household
  • a toilet, bathroom or kitchen facility is shared by the tenants

Typical examples of HMO properties include shared housing, such as that commonly used by students, and bedsits. 

A ‘household’ is defined as a single person or a family who live together. For instance, married or cohabiting couples, relatives, children, step-children and half-relatives would all be considered family members. If they were all living together, they would constitute one household.

A group of 3 friends, however, would be counted as 3 households if they were to live together.

What is a HMO licence?

Some HMOs require the landlord or manager to have an HMO licence. 

In general, an HMO property with 5 or more unrelated people who form 2 or more households living in a shared house will require you to have an HMO licence. 

However, some local authorities have stricter rules. Always check with your local council to find out if a licence is necessary for your property.

An HMO licence will generally last for 5 years, although this can vary from council to council. It will also only apply to one property, so if you have more than one HMO house that meets the requirements for a licence, you will need to obtain separate licences.

To qualify for a licence, the applicant must:

  • Be the most appropriate person for it. In other words, yourself or an agent or manager of the property.
  • Be ‘fit and proper’. This essentially means that the applicant does not have previous convictions for crimes such as fraud or violence, hasn’t broken the law for housing/landlord/tenant activities or been guilty of unlawful discrimination. Managing another HMO that has broken an approved code of practice will also bar you from gaining a licence.
  • Ensure that all management, fire, amenity and facility standards are in place.
  • Make sure that the HMO is suitable for the number of people agreed in the licence.
What HMO legislation is there?

Owning or managing an HMO property means that you will need to meet additional requirements in addition to those of a regular landlord.

These include additional fire precautions and management, room size and amenity regulations. These must be met even if you do not have to have a HMO licence.

The exact provisions may vary from council to council, so you will need to check local guidance. 

To give you some idea of the regulations you may need to meet, here is a brief outline. 

Management regulations

These are focused on how an HMO is managed and are likely to include:

  • Ensuring an adequate supply of water and drainage.
  • Arranging regular electrical inspections by a qualified person.
  • Providing means to dispose of waste.
  • Preventing the build-up of litter or rubbish.
  • Keeping any outbuildings, boundary walls/fences, railings, gates and driveways in good repair.

Fire precautions

Because of the larger number of people associated with HMOs, there are additional fire precautions to be met.

As an HMO landlord or manager, your responsibilities will probably include:

  • Ensuring that reasonable steps are taken to prevent tenant injury as a result of the structure or condition of the HMO property.
  • Keeping fire escapes clear.
  • Carrying out a fire risk assessment.
  • Checking and maintaining fire safety equipment, such as fire alarms.
  • Checking gas and electricity supplies.

Amenities and rooms

These regulations ensure that rooms are the correct size and number for the inhabitants. Regulations are also laid out for facilities including bathrooms, kitchens and toilets.

As a HMO landlord or manager, you responsibilities will probably include:

  • Ensuring that rooms meet the mandatory sizes laid out by the government.
  • Providing easy access to kitchen facilities for all inhabitants, which must be available 24 hours a day.
  • Providing washing facilities with both hot and cold water. 
  • Providing showers with a water-resistant curtain or door.
  • Ensuring that there are an adequate number of facilities for the number of inhabitants. 
What does HMO Insurance cover?

HMO Insurance is specifically tailored to houses of multiple occupancy.

This is important because HMO properties have increased risks. Because of this, regular Landlord Insurance is unlikely to provide all the cover you need. Failing to take out HMO Insurance could therefore mean that your insurance will be void if you make a claim.

Not all HMOs are the same, so the best HMO Insurance policy will be one that is created to meet the specific needs of your property. 

However, it is likely to include:

  • HMO Building Insurance: This will financially protect you if your property’s structure is damaged by events such as flood, fire or storms.
  • HMO Contents Insurance: If you provide furnishings such as beds, curtains and white goods, this policy will cover the cost of replacing or repairing them if they are lost, damaged or stolen. Your tenants may also want to consider Tenants Contents Insurance to protect their own possessions.
  • Property Owners Liability: This cover will provide you with financial protection if a tenant or another third party is injured or made ill by your property.
  • Loss of Rent: This will reimburse you for any lost rental income if your tenants cannot live in your property as a result of an event such as a fire.
  • Alternative Accommodation: This will cover the cost of housing your tenants elsewhere if your property is uninhabitable.

The cost of your HMO Landlord insurance will be dependent on several factors, such as the size and location of your property, and the number of tenants you have. 

To get an accurate estimate of the cost, you can talk to our experienced Lettings Team.

Get in touch about HMO Insurance

If you are looking for the right HMO Insurance for your property, get in touch with our experienced Lettings Team today to discuss your needs.

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