How To Ensure Your HMO Remains Compliant

Photo by Ixana Property

Keeping up with the latest HMO legislation and all of your legal obligations is absolutely crucial to ensure your properties remain compliant. There are hundreds of laws in effect across the private rented sector, on top of additional rules impacting the HMO industry. 

In recent years, there have also been some major legislative changes, including with the Renters Rights Act. This isn’t the sexiest part of HMO investment… It involves a lot of ticking boxes and gathering documents. 

To ensure your HMO is and continues to be compliant, there are a number of things you need to do before renting any rooms and on an ongoing basis. It’s not easy or fun when you’re working on building a portfolio, and particularly if you’re dealing with it all on your own. And you’ll likely have loads of other things you need to do and achieve as well!

This can be a constant juggling act… Between keeping your tenants happy, staying on top of maintenance and repairs and managing what often feels like endless compliance paperwork, it’s all too easy for things to slip through the cracks. But you have to accept that we all have to do this and just get on with it!

Here we’ll cover some of your legal obligations as a landlord, specific HMO legislation and certificates you need to have in place for all of your properties. We’ll also discuss some of my top advice on how you can ensure your HMO is compliant and remains so moving forward.

Compliance As an Ongoing Process

There are certain obligations you need to meet before renting out your properties and things to keep on top of throughout your tenancies. We often think about compliance as just being a checklist of things like Gas Safety and Electrical Installation Condition Report certificates; however, it’s really not that simple… 

Compliance is an ongoing and complex process that can involve everything from fire safety, amenity standards and licencing to anti-social behaviour and sending the correct documents to tenants at the right time. Falling behind on any of these areas can turn what should be a smooth operation into a total nightmare! 

Ignorance is absolutely no defence… There are penalties for failing to comply with certain legislation. In some cases, this can be fines, rent repayment, tenant compensation, revocation of your licence, being banned from letting properties or even criminal prosecution. This can be costly, in terms of time, money, headaches and legal trouble.

Above everything else, your HMOs must always be safe and liveable for your tenants, and ensuring your HMO remains compliant no matter what and exceeds minimum standards where possible will be absolutely crucial moving forward in any area of the private rented sector. 

Certificates

As part of HMO compliance, you’ll need to renew lots of different certificates with individual rules and responsibilities for each. There’s a lot to remember, but here are some of the basic certificates you’ll need to have in place for all of your HMOs!

  • Electrical Installation and Condition Report
  • Gas Safety Certificate
  • Energy Performance Certificate
  • Fire Detection System Certificate
  • Emergency Lighting Certificate
  • Fire Risk Assessment
  • Legionella Risk Assessment
  • Portable Appliance Tests

Licencing

HMO licencing is enforced differently across the country. While the national minimum standards are set centrally by the government, local authorities can insist on their own standards.

HMO properties are also increasingly subject to licensing from local councils, which needs to be renewed periodically and standards maintained. If you forget or miss the deadline for this, fines can be sizeable!

When it comes to licencing, you first need to know if your property will need a licence. You then need to understand the local licence requirements as councils have varying sets of rules and guidance across the country and even interpret the same rules differently in some cases.

If your HMO has three or four tenants, your HMO is considered a small HMO, and you may not need a licence depending on the area. HMOs with five or more tenants are considered large HMOs and require a licence from your local council. There are then additional and selective licencing schemes in place in certain areas, which can mean even small HMOs would need a licence. 

Standards

There are a number of standards you have to adhere to when owning a HMO property whether or not you need a licence. This includes amenity, space, fire and general standards.  

Fire standards are one of the most important aspects of ensuring your HMO is safe for tenants to live in. This includes having fire detection systems, emergency lighting, route of escape, fire doors, fire fighting, a fire risk assessment and emergency plan.

Amenity standards are designed to ensure tenants have a pleasant living experience and are protected from harm. This covers ventilation, sanitation, room lighting, facilities, furnishings and equipment.

The criteria around space standards involves minimum size requirements for rooms and space and layout of the property. Ensure all your rooms, especially bedrooms and kitchens, meet the minimum sizes required by the central government or local council. If you have any questions about the standards required, reach out to your local housing authority.

Health and Safety

HMOs are also required to meet health and safety standards set by the Housing Health and Safety Rating System. Issues like mould, damp or poor insulation can lead to enforcement action. Each of these areas requires attention, and overlooking just one of them can lead to legal trouble, penalties, or worse, putting your tenants’ safety at risk.

The Renters Rights Act requires landlords to take quick action when mould or damp issues are reported. You’ll need to actively monitor these reports, follow up swiftly and document all investigations and actions.

Additional Legislation

There is even more legislation you need to keep up with across your HMO portfolio, including:

Tips for Keeping Your HMO Compliant

As a HMO landlord, you must understand the ins and outs of all of the latest legislation and every one of your legal obligations. It’s absolutely crucial that you know how to keep your properties compliant not just right now but also moving forward as further changes could impact the industry. 

There are things you can do to help you get this part of investing in HMOs right. So, here are some of my top advice to help you do exactly that!

  • Systemise your portfolio.

At the beginning of your investment journey, it can all feel manageable – only a few tenants, some certificates in your inbox and folders scattered across your laptop. But as your HMO portfolio grows, the admin will grow alongside it, and suddenly you’re wasting so much time searching for documents, chasing reminders and trying to remember where everything is!

Systemising your portfolio doesn’t need to be complicated, and you don’t need the latest AI tools or the most expensive subscriptions. A few simple tools at the right time can save you huge amounts of time and stress.

Creating systems in your business is all about building a solid structure that helps improve your efficiencies and ensure you stay on top of all the different compliance pieces. Write down tasks and create checklists and reminders. Also, batch your processes and find areas to simplify and automate where possible. 

Additionally, use property education resources to help you and build a roadmap to systemise your entire business. Systems can be implemented into every area of your HMO business, such as:

  • Keeping up with legal obligations and legislation and maintaining certificates and documentation needed for running HMOs
  • Property and tenant management tasks and activities, including tenant move-ins and move-outs, maintenance and repairs, inspections, tenant communication and rent collection
  • A range of business and admin tasks like responding to emails and answering phone calls
  • Consider using a property management software.

Using technology throughout your entire HMO business can allow you to remain compliant moving forward and can help you keep up with recurring activities and tasks and any requirements for you as a landlord. You can also track tenant complaints, maintenance and repairs and automate tenant communication.

A common mistake among property investors is waiting too late to invest in a CRM or property management software. It can become much more difficult to systemise this once your portfolio is large and habits are already deeply embedded. When you’re growing your HMO portfolio, a proper CRM can start to become worthwhile, especially when you move beyond around 12-15 tenants.

Our partner property management software COHO can help landlords ensure that every room in their HMOs are up to the required standard. COHO can help you centralise and streamline your processes in a range of areas, such as:

  •  Compliance
  • Document storage
  • Maintenance
  • Tenant communication
  • Tenant onboarding
  • Reminders
  • Rental income visibility

You can learn more about COHO and how it can help you here.

  • Don’t underestimate the challenges of HMO management.

When it comes to compliance, HMO management is a key area you must get right on an ongoing basis. So, it’s essential to go into managing any HMO with the awareness that this will be very challenging and take up a lot of your time and energy. 

Since I first started in HMO investment, I’ve managed thousands and thousands of tenants, and with that has come a fair share of ups and downs, no matter what I’ve done to try to mitigate any issues as much as possible!

If you focus and prioritise the thing rights, you can be prepared for any challenges that come your way. Focus on keeping up with changing compliance and communicating with your tenants effectively. But HMO management really isn’t for everyone, so also take the time to determine whether self managing or working with an experienced agent is right for you.

  • Prepare for worst-case scenarios.

There are a whole range of challenges and issues that can come up when managing HMOs and compliance that could put you in hot water or send you under if you get it wrong! So, it’s important you’re aware of everything involved with managing HMOs from the beginning and especially all of the legislation and compliance pieces.

At some point, you’ll have to deal with some difficult situations. A difficult tenant in particular can be particularly challenging to manage, and the law isn’t always on your side when it comes to removing them, especially with the Renters Rights Act.

There are certain processes you will have to follow and hoops you must jump through to get to court, and this can be very time-consuming. Because of this, it’s recommended to prepare for worst-case scenarios ahead of time and try to mitigate any risks you can. No matter what you, will face issues, but work on being as prepared as possible.

It isn’t the case of if things with your properties, tenants or tradespeople go wrong, it’s when. Things will break down and sometimes things will be out of your control. No matter if you have solid structure and foundations in place, it won’t be all plain sailing.

We all will have to overcome obstacles we don’t necessarily foresee. With all the legislation and compliance required across the industry, you aren’t going to be able to simply sit back and collect rent. So, make sure you’re prepared for worst-case scenarios and do your due diligence on everything you need to keep up with as a HMO investor.

  • Work with a property-focused VA.

As you scale up your HMO business, you’ll need a virtual assistant or someone to help pick up the work that you simply don’t have the energy, time or capacity for at some point. This could be all sorts of administrative, compliance and bookkeeping tasks, in addition to tenancy progressions and communication, and allow you to juggle all of your admin tasks while staying compliant, avoiding fines and keeping operations running smoothly.

With this type of professional, you’ll want someone who understands your business model and the industry and has experience doing what you’re already doing. A strong property-focused virtual assistant or virtual property manager can help keep all of the moving parts under control.

They won’t replace the landlord’s responsibility, but they can set reminders, file documents and keep records updated. If you’re interested in adding to your team or want to find a cost-effective way to do this, we have a partnership with Jane, who runs Bream – a company specialising in virtual support for HMO investors!

Need Support?

The HMO investors who often do the best when it comes to compliance are not necessarily the ones working the longest hours… They are the ones who have the right systems, support and people around them.

There are many ways you can get the support you need when it comes to abiding by all of your legal obligations and HMO legislation. The current regulations and challenges that come with some of the latest reforms will make it even more challenging to do this all by yourself.

There are still plenty of opportunities in the industry as long as you have the right support on your side. At The HMO Roadmap, we work with highly recommended partners to help support you at any stage of your HMO investment journey. The Roadmap is also home to tons of resources, training and advice to help you start, scale and systemise your HMO business. 

It even includes a whole course on legal obligations and legislation, so become a member today to take your learning to the next level! If you have any questions about HMO compliance or other areas of this kind of property investment, join us in our free Facebook Group The HMO Community.

About the Author:

Andy Graham is the founder and the lead trainer at The HMO Roadmap! He writes as a regular columnist in different magazines about a variety of HMO topics and is the host of The HMO Podcast! Follow Andy on Instagram!