is a 4 bed HMO worth it

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    is a 4 bed HMO worth it

    Hi everyone, first post, so please be kind ;-)

    Have let out a victorian 2 bed house for about 10 years. Steady profit of £300 ish per month. Little hassle. Virtually no voids.

    Due to covid, have lost job, so thinking of ways to increase income. So, considering converting living room to bedroom 3 and maybe half of the extended kitchen to bedroom 4. Assuming I get HMO license from council as want all to be legit.

    So,
    my questions are-
    • Is the extra monthly income worth it - ie paying the council tax, utilities, etc?
    • Will a 3 bed be suffice or do i need a 4 bed for it to pay off?
    • is the extra hassle worth it?

    and anything else you are kind enough to throw into the mix.

    cheers

    #2
    Lots of hassle and need to know your market. Are you going to rent out to sharers who know each other or individuals which means the rent will have ti include the bills. Its a big job keeping a lid on those bills. Key meters. The water in particular. Much more usage of boiler cooker wash machine etc. Then it all depends on your local authority and their HMO rules. You may require planning and if you need a licence expect quite a big initial expense. Wired fire alarms, fire doors etc etc. If you making £300 a month with no voids and no hassle KEEP IT LIKE THAT!

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      #3
      The short answer is probably no its probably not worth the hassle.

      Comment


        #4
        I have a 4 bed and a 5 bed HMO and they can be a load of work and sometimes they're OK. it depends on the people in them. Some people needing a room are working away from their home town and they tend to be no bother, but some are men who've been thrown out of their home and have run out of places to stay. These tend to be dirty and unable to live with others. You'll be responsible for keeping the communal spaces clean. I provide cleaning materials, washing up cloths, tea towels and one toilet per person per week (so nobody brings those thick blue cleaning rolls home from work and block the toilet). I've had 5 empty rooms all over lock down so the income isn't great at the moment. The other 4 rooms are taken by long term tenants.

        Comment


          #5
          My first option (depending on the pool of available tenants) would be to let it out on a joint AST to three sharers (students or young professionals). They are then responsible for bills, cleaning etc. The cost of converting part of the kitchen into a bedroom for a 4th person would make a big dent in your profit for a long time and it would probably take value off the house.

          If you have, or could find, a reliable cleaner locally, I'd also consider airbnb, assuming it is somewhere people want to stay for a short break. Much more profitable and less hassle even when cleaning cost, etc, is taken into consideration. No point if it's an industrial suburb somewhere, but any kind of pleasant city/countryside location will be successful.
          'Pause you who read this, and think for a moment of the long chain of iron or gold, of thorns or flowers, that would never have bound you, but for the formation fo the first link on one memorable day'. Charles Dickens, Great Expectations

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          • 'Declassify' a small HMO?
            by nukecad
            Sorry for a rambling post, but it's a bit of a rambling situation.

            Our property is classed as an HMO, and so the LL is responsible for the council tax.

            Background:
            You could probably skip this but let's give the full story:
            When we moved in ten years ago there were...
            08-08-2020, 13:06 PM
          • Reply to 'Declassify' a small HMO?
            by doobrey
            1. I don't think there was any suggestion that the tenancy might be lost over this issue, whatever the outcome of the council tax question.
            2. It's still an HMO as far as I can see, in which case there is nothing to call the council about....
            09-08-2020, 15:48 PM
          • Reply to 'Declassify' a small HMO?
            by Delectable1
            In other words you're happy to risk loosing this tenancy for the sake of two phone calls; one to update the council that you live there lone and another to inform then it's no longer the case.

            If the LL doesn't want the hassle, he should advertise the whole property for rent as one uni...
            09-08-2020, 11:51 AM
          • Reply to 'Declassify' a small HMO?
            by DPT57
            There are two definitions of an HMO. The council tax definition in the Local Government Finance Act 1992 is different to the Housing Act 2004 definition. When there were 3 people living there it met the test for both, but as soon as the 3rd person moved out it stopped being a Housing Act HMO, but continued...
            09-08-2020, 08:31 AM
          • Reply to 'Declassify' a small HMO?
            by doobrey
            There are different criteria for different things (council tax, planning, licence).

            Letting to a single household is a change of use from C4 to C3. This was recently discussed on another thread. As per that discussion this is a permitted development so I believe there is no requirement...
            09-08-2020, 07:15 AM
          • Reply to 'Declassify' a small HMO?
            by nukecad
            Yes, DPT57, that's the way I'm looking at it.

            The council is currently happy that CT is being paid, I'm not bothered either way, my LL would prefer not to have to pay the CT himself but that's his matter to sort out if he can.

            TBH I currently have a 3 bedroom, 400 y/o, property...
            08-08-2020, 22:56 PM
          • Reply to 'Declassify' a small HMO?
            by DPT57
            In the absence of anything written, the Council have obviously interpreted this as 3 x room only tenancies rather than a joint tenancy. I think thats probably a reasonable interpretation if the landlord deals with each person's rent separately. This may even be the default tenancy type for shared accommodation...
            08-08-2020, 18:37 PM
          • Reply to 'Declassify' a small HMO?
            by nukecad
            Thanks for your replies.

            The only issue as I see it is that If/when the sharer comes back after covid it is going to make things complicated at the council.
            And let's face it we all know they are not the sharpest knives in the box.

            From my point of view best left as it...
            08-08-2020, 17:06 PM
          • Reply to 'Declassify' a small HMO?
            by jpkeates
            I'd have thought that your landlord would simply have to tell the council of the change in circumstances and then you'd have to claim the exemption.
            Or, most likely, you could probably do both at the same (very long) time.
            08-08-2020, 15:30 PM
          • Reply to 'Declassify' a small HMO?
            by doobrey
            I think it would remain an HMO unless you had occupation of the whole property.



            https://www.londonpropertylicensing....ay-council-tax...
            08-08-2020, 15:29 PM
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