Resident landlord taking in a family as lodgers: does this create an HMO?

[BueJay]

My first post, so please be gentle on me. Thanks for any pointers.

I am a single individual and was planning for a while to get a house, the mortgage on which I can afford on my own without any rental income. However, I was hoping not to live alone and hence wanted to buy a rather large house and share it with a friend and his family (married couple and their four underage children), taking them as lodgers.

However, it hit me recently that I will be possibly running afoul of the HMO regulations, since the above situation would be an not only an HMO (three people forming at least two households), but a large one at that! Thus I would need a license, so getting a mortgage would be difficult (let's not discuss the mortgage issue if HMO classification/license can be avoided).

My situation is not really the usual case where you have multiple unrelated lodgers, since all of them really form a single household, but I wanted to ask what the law says.

There is an exception where the landlord and his household count as one person, hence -- assuming I am reading the law correctly -- if it was my friend taking me as a lodger, the house would not be an HMO.

I asked morgage advisers and were told that would not be an HMO, but were not given a reference to a ruling so I don't trust that.

My question is, would this arrangement (single resident landlord plus lodgers forming a family of 6) be an HMO or not?

[theartfullodger]

Wouldn't be a HMO it's households (2) not people that matter.

But... A) don't rent to friends or family...
B) with 6 people & just you they'll end up running your home.

Expecting mortgage "advisers" (salesman is more realistic) to understand housing law is likely to lead to disappointment.

[loanarranger]

I know you don’t want to know anything about mortgages, but as you will be resident in the property with the intention of subletting a major part of the property this would prove a problem in securing a mortgage. BtL’s are Unregulated but with you occupying the property this trips over to a Regulated Mortgage, something which falls outside the criteria of many leading lenders.
Whilst I accept the comments of my learned friend theartfullodger regarding brokers they are in fact the best target to investigate what funding options are available; once that is established then the question of the property being an HMO can be resolved by talking with the Local Authority.

[DPT57]

If youre not related to the family then yes; it would be a licensable HMO.

[loanarranger]

On the basis of what DPT57 has said , that would indeed complicate your proposition as the vast majority of lenders would noT accept even aN conventional Unregulated BTL from you as you are a First Time investor with absolutely no experience of such types of property.

[jpkeates]

There is an exception where the landlord and his household count as one person, hence -- assuming I am reading the law correctly -- if it was my friend taking me as a lodger, the house would not be an HMO.

I asked morgage advisers and were told that would not be an HMO, but were not given a reference to a ruling so I don't trust that.

You should get a different mortgage broker.
That many people in two households is an HMO (and will now require licensing).

If your friend owned the property and took you in as a lodger, it wouldn't be an HMO.