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Deal Sourcing UK Investment Property

Are HMO Properties A Good Investment In 2021?

A home in multiple occupancy (HMO) is a residence that is rented out to at least three persons who are not from the same ‘household’ (for example, a family) but share facilities such as the bathroom and kitchen. It is often referred to as a “home share.”

What Are The Primary Advantages Of Investing In HMO Properties?

As with any type of property investment, there are advantages and disadvantages to investing in HMO Properties that owners must consider.

However, there are certain consistent benefits to HMO investment if done correctly:

  • HMO homes can provide greater rental yields than regular buy-to-let homes, often up to four times higher.
  • Because people are searching for low-cost rental spaces, demand for shared living accommodation tends to be high even in the face of economic changes and uncertainty.
  • When one tenant decides to leave, you still have other people paying the rent while you seek for a replacement for the vacant room.

HMO homes, on the other hand, may be complex and are subject to rigorous restrictions than normal buy-to-let homes.

If, on the other hand, you are renting out huge HMO Properties in the United Kingdom, you must get a licence.

  • It is rented to 5 or more individuals who form more than one household, and some or all renters use the same toilet, bathroom, or kitchen facilities.
  • Rent is paid by at least one resident (or their employer pays it for them)
  • Even if your property is small and only rented to one or two persons, depending on the area, you may still need a license.
Restrictions
  • A license is valid for a period of up to five years.
  • You must renew your license before it expires.
  • You must obtain a separate license for each HMO unit you possess.
Prerequisites
  • You must ensure that the property is suitable for the number of occupants (this always depends on its dimensions and amenities)
  • The ownership of the residence (you or a real estate agency) is deemed ‘apt and appropriate,’ for example, they have no record of criminal backgrounds or violations of landlord laws and regulations or the code of application.
  • You must also provide the authorities an updated gas assurance certificate each year, as well as install and maintain the fire sensor.
  • When requested, provide security certificates for all electrical equipment.

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Dimensions Of HMO Rooms

The revised HMO Property Requirements for 2019 also included additional rules on minimum room measurements.

Since October 1, 2018, each room utilized as a sleeping area in an HMO Property must be:

  • If the person sleeping in it is over the age of 10, it must be at least 6.51 square metres.
  • If two people above the age of ten sleep in the same room, the area must be at least 10.22 square meters.
  • A minimum of 4.64 square metres for one person under the age of ten.
  • Any room with a floor space of less than 4.64 square metres may not be utilized as a sleeping room.

What is the optimal number of bathrooms for an HMO property?

Landlords should offer one bathroom for every four tenants living in an HMO. Many HMO rooms have suites, and HMO property owners should always ensure that persons residing in an HMO property have access to functional, acceptable bathing facilities.

Mortgages for HMOs

HMO mortgages differ from traditional buy-to-let mortgages in that they allow numerous rooms to be rented to numerous persons, which conventional buy-to-let mortgages do not allow.

There are several HMO mortgages available, depending on the stage of the HMO property, and they include:

  • Loans for building and construction expansion
  • Loans for renovations
  • Mortgages and refinancing for new and existing HMO properties.

DealSourcing.co has brought you this information.

DealSourcing.co gives you access to the power of automation. With the click of a mouse, you can search over 200,000+ Below Market Value deals (Buy-To-Let, HMOs, and BRRR) with ROIs of moreover 15%. Using our efficient and user-friendly tools, you can find High Yield properties.

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