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Since 2000, the number of privately rented homes has grown by 2.5 million to over 4.5 million and is set to increase even further to over 5.8 million by 2025. As finding somewhere to live gets harder, is the concept of the ‘traditional HMO’ changing to meet the needs of the modern renter and should they cater for families?

Fuelling Change

Soaring house prices have made significant contributions to what is dubbed ‘Generation Rent’ as would-be buyers find themselves priced out of the market with low incomes and unachievable earning ratios needed to secure even the most basic of property.

The last official figures published by the government in 2019 estimated that in 2018 there were 497,000 HMOs in England and Wales.

Even if this figure had remained flat since then, it constitutes at least a million households but probably a lot more.

And we know that HMO are gaining in popularity as is their reputation for delivering high end accommodation only equalled by the high end prices now being coveted by a more discerning renter.

This could be one of the reasons why we are seeing an increase in the number of HMOs coming to market as the private rental market continues to expand.

The Origin of HMOs

A House in Multiple Occupation (HMO) is a rented residential property where common areas, including kitchens and bathrooms, are shared between more than one household or family. 

On the face of it, that seems very straightforward. However, as soon as you start to interrogate the details and put terms like ‘family’ into the mix it gets complicated.

This type of property was recognised and classified in English law in the 1980s. It originated in changes to fire safety legislation after a series of incidents in which people died when overcrowded buildings caught fire. 

According to the Campaign for Bedsit Rights, between 1985 and 1991 an average of 3 people a week were killed in such fires.

Buildings in multiple occupancy were then classified as HMOs and made subject to higher standards of fireproofing, with measures including fire doors and better emergency escape routes.

The legislation was superseded by the Housing Act 2004, which brought in a more complete and complex definition. 

It also introduced a new licensing regime under powers given to Local Authorities. The definition and legislation vary across the four nations of the UK, but achieve broadly the same result.

The Current Definition of HMO’s

A House in Multiple Occupation is a building or part of a building (a flat, for example) which is let to three or more people who are not all part of the same household group. The property will have at least one shared amenity, such as a kitchen or bathroom. 

This is an important feature because it prevents the different households from having entirely autonomous living space.

So far so clear. 

Then we come to the definition of ‘household’. The term was chosen specifically to include tenants who do not fit the conventional notion of family, either because they are groups of friends or couples without children. 

A household could be one person, several friends, a couple with children or even an extended family, including grandparents and carers. 

As the minimum number of tenants is just 3, then a property might house three households consisting of single people. As you can see, the definition can cover a very wide variety of domestic groups.

Licensing HMOs

One of the main purposes of the definition is to facilitate the licensing regime. Landlords need a licence if the shared property is let to at least five people who make up two households or more. The licence is accompanied by greater legal responsibilities for the landlord. 

These include 5-year electrical inspections, annual gas safety checks, safety measures including smoke alarms, providing a sufficient number of rubbish bins and ensuring that common areas and shared facilities are kept clean and in good repair.

Renting a HMO

The public perception of HMO’s has often been that they are exclusively populated by low-income individuals and couples. 

However, a study for Northampton Borough Council conducted by Loughborough University in 2018 found evidence to refute this view. The authors identified HMO’s as a vital sector of the local housing market, in demand not just from vulnerable social groups but also students and young professionals.

Rising house prices have inevitably increased rental demand, which has, in turn, has caused rents to rise. HMO’s are becoming the obvious alternative to independent accommodation across the entire spectrum of tenants as the element of sharing keeps prices down, but the concentration of several households in one home yields higher revenue for the landlords. 

The cost of living crisis is also fueling high demand for rooms including from a section not usually associated with renting HMO’s; families.  

Utilities are usually included in rental contracts for HMO’s (often with fair usage caveats) but as the cost of heating our homes increases, there is almost an urgency from families to find cheaper and more suitable accommodation especially now that there is so little available stock.

Renting a HMO to families

The Government website on Houses in Multiple Occupation has the following description for what constitutes a HMO:

Your home is a house in multiple occupation (HMO) if both of the following apply:

  • at least 3 tenants live there, forming more than 1 household
  • you share toilet, bathroom or kitchen facilities with other tenants

Your home is a large HMO if both of the following apply:

  • at least 5 tenants live there, forming more than 1 household
  • you share toilet, bathroom or kitchen facilities with other tenants

A household is either a single person or members of the same family who live together. A family includes people who are:

  • married or living together – including people in same-sex relationships
  • relatives or half-relatives, for example grandparents, aunts, uncles, siblings
  • step-parents and step-children

So there is not anything that technically prohibits the landlord from considering this as an option, however is it advisable to have children in what is traditionally an adult environment? 

Will their presence constitute a health & safety risk due to the size of rooms and available communal areas? And then there is the potential noise and disruption children naturally bring to a home; is it fair to the other residents? 

The Changing Face of HMO’s

At Inventory Base we have witnessed extraordinary changes over the past few years, not just from the top down via legislation but in the form of changed expectations and behaviours from landlords and tenants.

Some landlords and agents are literally seeing 100’s of applications for one room or property leaving those unlucky enough to walk away without keys desperate for accommodation and willing to take anything on offer.

It’s not surprising, then, that we’re seeing an increase in the numbers of couples with children also applying for rooms in HMO’s as well as from the older generation.

SpareRoom have stated that there is a seismic sift in numbers – a 239% increase – in 55 to 64-year-olds looking for house shares since 2011 and a 114% increase for the 45-to-54 age group so this situation is not just a ‘one off’ but a real change to the rental demographic.

Everyone needs somewhere, to nurture and grow, to live.

Whether a HMO is the right option is up for debate but we could be witnessing a revolutionary change in both our understanding and use of HMOs.