Today’s blog is all about running a HMO in Liverpool. HMO’s can be extremely profitable when set up properly. However, there are many thing you will need to get right including council regulations, health and safety and getting the right mortgage.
Getting the correct mortage
The first important aspect of running a HMO in Liverpool is getting the correct mortgage. It takes about 96 days to process a buy-to-let mortgage application for an HMO, which includes everything from opening the case to submitting the application. The amount of time it takes will be determined by the level of difficulty. Lenders are likely to want documentation of an HMO licence, so have it available before submitting your mortgage application.
Because surveyors tend to have differing viewpoints, this is an attempt to get to the bottom of what a surveyor will suggest. You might talk to a local surveyor, who will most likely be completing the mortgage valuation, to see whether the prices are better.
Health and Safety
Houses with numerous occupations are subject to additional health and safety standards to guarantee that their residents are safe. If your home has five or more individually rented rooms, it is classified as an HMO. If you have fewer than five rooms, check your local council’s guidelines as they may vary depending on where you live. The Management of Houses in Multiple Occupation (England) Regulations 2006 must be followed to guarantee that health and safety regulations for HMOs are met. Therefore, you will need to:
- Ensure that all fire precautions are followed, as well as procedures such as removing any obstacles, to keep tenants safe.
- Electrical installations and appliances are subjected to tests such as PAT testing to ensure their safety.
- All shared installations and areas must be maintained, repaired, and kept clean, including ensuring that they have enough illumination.
- You must supply adequate garbage disposal and ensure that it is collected on a regular basis.
- Every year, as an HMO owner, you must provide a copy of your Gas Safety Certificate to the local authorities, and you must be able to give it if your local authority requests it.
- Check for fire doors, fire blankets, and fire extinguishers in your HMO.
- Install specified types of doors handles and locks.
- Depending on the size of your HMO, provide enough fire and CO2 alarms.
Areas to Consider getting HMO
Wavertree and Walton are two of the best areas in Liverpool to find an HMO.
Landlords in Walton in Liverpool can expect a healthy 7.13 percent rental yield. Large Victorian houses, some of which have been converted into 5–7-bedroom HMOs, semi-detached homes, bay-fronted terraces, and some pockets of modern estates and apartments are among the property types in Walton.
Every year, up to 34,000 students are estimated to require housing in Liverpool. Many of these students traditionally relocate into HMOs off Smithdown Road – and to a lesser extent Kensington – following their first year in halls of residence to enjoy life with their pals. Over the course of the year, tens of thousands of students have called Wavertree their home.
Utilities and Maintenance/Extra Costs
The most critical aspect of renting out an HMO is keeping it clean and safe. Each month, you should budget for a bigger than usual maintenance budget. If tenants move in and out of an HMO on a frequent basis, rooms will almost certainly need to be re-decorated. Having a team of contractors on hand is another fantastic approach to keep a clean and safe atmosphere. This will keep tenants pleased and reduce the number of works orders you receive.
Additional services can be provided to keep your tenants satisfied and cut down on vacancy time. In shared houses, for example, weekend cleaners are widespread. Cleaners can also act as the landlord’s eyes and ears, noting any potential issues.
Taking great quality pictures/Videos/Good advertisement
When you start looking into HMOs, you’ll see that the rooms on offer are typically basic and often quite dull. A naked mattress or an unmade-up sofa bed may be seen in standard HMO promotional photos. There could also be a shortage of furnishings or signs that the rooms haven’t been painted in a long time. You should always strive to stand out; the staging photos you use in promotional materials are crucial. Good photographs perform most of the legwork for you; they compel potential tenants to click on the ad, which leads to more inquiries.
Create a video tour of the property, including their bedroom and other common areas. This video should be well-produced, with a more natural/raw feel to show the tenant exactly what the property is like. Get one of the current tenants to film it for you, since they will be able to do a true voice-over, highlighting the property’s virtues better than you can because you do not live there, or you could do it yourself.
To properly divide the cost of energy, gas, water, and council tax and produce a good profit, you should focus on acquiring at least 5 tenants in each HMO. If the first three tenants cover your costs, adding more tenants will result in a profit. You have the option of adding a one-story or two-story expansion to your home. Another alternative is to create additional social space, which is commonly accomplished by constructing a conservatory. Conservatories offer a lot of potential in terms of value. If your home already has a large kitchen, you can combine it with a huge conservatory to make your HMO’s major community living room. This will allow you to turn the other shared space, which is usually the living room, into an additional bedroom.
Updating Interior Designs
This is a quick, low-cost, and effective strategy to boost the value of your HMO. It’s well worth contemplating the huge returns you can get from relatively modest interior design adjustments. If you don’t want to go through the bother of building a double storey extension or converting a garage, a few interior design modifications can make a big difference in terms of boosting the amount of rent a renter will be prepared to pay.
Abiding by council guidelines
There are several council guidelines that must be adhered to. If you don’t have a licence, you risk losing it and paying hefty fines. The HMO licence guidance from Liverpool can be found at https://liverpool.gov.uk/business/licences-and-permits/landlord-licensing/houses-in-multiple-occupancy/hmo-licence-guidance/. It’s good to get a read and memorise this to avoid any unnecessary consequences in the future.
Ask current tenants if they have any friends seeking for a room as soon as they provide their notice. Request that they publicise the room in their social connections on your behalf. This might be as simple as posting your rental agent’s advertisement, but make sure you reward them for finding a decent tenant.
When your letting agency has finished creating the web advertisement on whatever large platform they use, distribute it everywhere: on social media, on online forums, with friends and family, in Whatsapp groups, and inform everyone. You never know who might be seeking for a place to live or who might know someone who is.