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HMOs: an investor’s guide Bush & Co explains what an HMO is, how licensing works and why Cambridge continues to be such a strong market for this type of property What is an HMO?
You may know an HMO (House in Multiple Occupation) as a house share. Put simply, it’s a property rented out to at least three people from separate households who share facilities, like a kitchen or bathroom. A property with five or more tenants is called a large HMO and must be licensed by the local authority – in the centre of Cambridge, that’s usually Cambridge City Council. If the property is outside the city, it could fall under a different area, like South Cambridgeshire District Council, so be sure to research carefully. Whether it is a large HMO or not, households are defined as a single person, a couple or a family living together. Getting to grips with licences and regulations When does a property need an HMO licence? You’ll be happy to note that properties with four or fewer tenants usually don’t need a licence. That being said, they still need to meet all the safety standards required. Landlords must license a property if: •It is occupied by five or more people forming two or more separate households. •It is a purpose-built flat in a block of one or two, and five or more people live there as an HMO. Cambridge City Council might also call for smaller HMOs to be licensed in certain situations, so it’s always worth checking before letting. Licensing costs can vary depending on the type of property and the local authority. The application process usually involves submitting details about the house and landlord, and often an inspection too. If your HMO has seven or more occupants, you might also need planning and building control permission. On top of all this, the upcoming Renters’ Rights Bill will introduce changes to housing rules across England. Landlords should plan for new regulations around evictions, rent increases and tenancy agreements. Staying informed about licences and regulations can help you confidently manage your HMOs. Why invest in HMOs in Cambridge? HMOs are sought-after. Many young adults enjoy the social side of living in a house share and the large student population in Cambridge creates a steady demand. This type of property also appeals to people who move frequently for work, those with
HIGH DEMAND As the student population in Cambridge continues to grow, so does the need for HMOs
Managing your HMO Running an HMO successfully is about balance – keeping tenants safe and happy while making your property profitable. Here are our top tips for helping you manage your HMO: •Carry out regular safety checks and fix issues quickly. HMOs have extra fire safety responsibilities that have to be checked, such as risk assessments, fire alarms and clear escape routes. •Make sure to maintain common areas so that they are clean, safe and pleasant for everyone. •Keep communication open (happy residents stay longer). By following these tips, you’ll protect both your investment and the people living in your property.
long hours and tenants who don’t want to manage an entire property alone. While HMOs can be more time- consuming to manage than single-let properties, the rental returns make it worth it. In Cambridge, this need gives a gross rental yield of approximately 5.7%. Choosing the right property The first step is finding the right house. A three- or four-bedroom semi-detached property is a popular choice. With a few upgrades and tweaks to communal spaces, it could bring in significant returns. It’s important to find a prime location for your HMO too. Chesterton is great for professionals who want good transport links, especially with Cambridge North train station nearby. Whereas, a property near Trumpington may appeal to hospital staff and researchers at the Biomedical Campus. Proximity to Addenbrooke’s Hospital and the M11 also makes the area convenient for shorter commutes. As you view properties, think about how they’ll work for shared living. Is there space for more than one bathroom? Is the kitchen big enough for several people to cook comfortably? Extras such as a garden can also make a big difference.
For more info visit bushandco.co.uk. For sales call 01223 246262, email sales@ bushandco.co.uk or visit 169 Mill Road, Cambridge CB1 3AN. For lettings call 01223 508085, email lettings@bushandco.co.uk or visit 8 The Broadway, Mill Road CB1 3AH
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