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Letting a property to several unrelated tenants, such as students or young professionals, requires specialist HMO landlord insurance. HMOs (Houses in Multiple Occupancy) often have additional risks that standard landlord insurance doesn't cover. This guide from Advanced Rent provides all the information you need if you're considering becoming an HMO landlord.
What is an HMO property?
A house of multiple occupancy (HMO) is a property rented out to several tenants who are not part of the same household or family. HMOs are common for students or young professionals who have their own bedrooms but share common areas, such as bathrooms, living rooms, and kitchens.
According to the Gov.uk website, a property is defined as an HMO if:
There are at least three tenants forming more than one household.
There are shared toilet, bathroom or kitchen facilities.
A household consists of a single person, a couple, or members of the same family living together (including stepchildren).
An HMO generally won't need a license unless five or more people occupy it. You'll need to apply through your local authority, and details of how to apply can be found on the Gov.uk website.
What are your responsibilities as an HMO landlord?
In addition to the standard landlord responsibilities, there are extra considerations if you choose to rent out an HMO:
Ensure smoke detectors and carbon monoxide alarms are installed and maintained.
Have the electrics checked every five years and the gas checked annually.
Ensure the property is not overcrowded.
Provide suitable washing, cleaning, and cooking facilities.
Provide rubbish disposal facilities.
Keep communal areas and facilities clean and in good condition.
Ensure bedrooms meet the minimum size requirements (6.52 square meters for one occupant over ten years of age - be aware some councils have set higher minimums).
What is HMO landlord insurance?
HMOs come with unique risks. Many HMO landlords face an increased likelihood of building and contents damage, loss of rental income, and theft. This is why HMO specific insurance is necessary to ensure you're fully protected. Advanced Rent offers HMO landlord insurance specifically designed to protect multiple occupancy buy-to-let properties.
What is covered by HMO landlord insurance?
HMO landlord insurance policies offer varying levels of cover. However, here's a breakdown of what most policies include as standard or as additional cover:
Buildings insurance: This covers rebuilding or repairing your property after damage caused by insured events like fire, theft, storm damage, and floods. Some policies include accidental or malicious damage, while others require extra payment.
Contents insurance: This covers fixing or replacing any items you provide for your rental property, such as furniture or appliances. Contents insurance is essential for HMO landlords as many HMOs are fully furnished.
Public liability insurance: Having multiple unrelated tenants increases the likelihood of liability claims. This covers legal fees and compensation for third-party injuries on or by your rental property.
Loss of rent cover: This protects you if your tenants have to move out due to an insured event.
Rent guarantee insurance (optional): This guarantees your rent is paid, even if your tenants miss a payment.
Legal expenses cover (optional): This covers legal expenses if you need to go to court to claim damages, evict a tenant, or claim back rent arrears.
Home emergency cover (optional): This covers the cost of calling out a contractor to fix an urgent issue or emergency in your rental property, for example, a burst pipe.