Top tips for investing in the Buy To Let market

Investing in bricks and mortar could be a prudent way to secure your future and provide a nest egg in retirement. Buying a property for use as a house in multiple occupation (HMO) is one of the ways you can invest your money in the housing market. But there are a number of areas to look at before deciding to spend your hard earned money in the buy to let market. Here, Jo Morgan Associate and Chartered Legal Executive dealing with Residential Property for Coodes Solicitors, offers advice on how to get on the HMO property ladder.

A property is classed as a HMO if it is there are more than three people – forming over one household – living in the house, with the toilet, bathroom or other facilities shared by the tenants.

If there are at least five tenants, forming two or more households, sharing facilities in a building at least three stories high then the property is judged to be a large HMO. Any large HMO needs a licence from the local council and cannot be transferred to another person or relate to more than one property. Licences are usually valid for five years but can be varied or revoked by the council.

There are a number of responsibilities linked with taking on a HMO so do your research and make sure you are aware of your commitments before deciding to purchase. By taking on a HMO you are opting for a buy to let property with the idea to rent it out to multiple occupants. This is a particularly popular concept to students and in cities and densely populated areas.

Before you exchange contracts on a property, it would be a good idea to get advice on capital tax allowances and tax reliefs available in this area from a specialist. There are many recent changes to allowances and it is important to take these in to account when budgeting and looking ahead financially.

When providing a safe, well maintained HMO, a landlord must carry out a number of checks and procedures including making sure the property has an annual gas safety check, electricity checks every five years, has adequate fire safety measures in place and ensures the property isn’t overcrowded. There should be adequate cooking and washing facilities with communal areas and shared facilities clean and in good repair. Tenants should also be provided with an adequate number of bin bags.

If you are looking to buy a HMO or if you have bought a property and hope to rent it out as a HMO or large HMO, then you may also need to consider applying to the local authority for change of use planning consent. There are exclusions from the requirement for planning consent and this is different to the need for a licence. A property may require a licence but no planning permission or vice versa.

If, in the future, you want to convert your HMO back to a dwelling, you generally do not need planning permission, unless it is a large HMO when you would mostly need to apply for consent.

For further advice and assistance, contact Jo Morgan at Coodes by emailing Jo.Morgan@coodes.co.uk or call 01726 874727.