HMO - Buying and Licensing Process

So, you’ve decided to buy a ‘HMO’ investment property in Edinburgh!

HMO’s, or ‘House in Multiple Occupancy’ to use its full title, have performed very well as investment assets in the city over the last 20 years.  But what should you consider when buying one and obtaining an HMO licence.

Well, there is quite a lot to be aware of and this blog post will take you through some of the key points you need to be aware of.

What is an HMO?

• HMO – House in Multiple Occupation.
• A property is an HMO if it is tenanted by 3 or more unrelated individual people.
• A HMO licence is issued by the local authority and it is only issued if the property meets a set of physical standards and regulations set by the local authority. Click Here to see this.

Prior to purchase (if the property already has an existing HMO Licence)

• Ensure the HMO licence is still in date if purchasing a ‘licensed’ property. The licence should be at least 2 months in date after the purchase date – a renewal licence application following a purchase must be submitted to the local authority within 28 days of the sale completing. There is no ‘grace period’!
• Your solicitor should obtain copies of Electrical Installation Condition Report (EICR), Portable Appliance Test (PAT), Gas Safety Certificate (GSC), Fire Detection and Alarm System Installation Certificate, Fire Fighting Equipment Certificate, Annual Sprinkler System Certificate (if applicable), Emergency Lighting Certificate (ELC), and Legionella Risk Assessment (LRA). Yes, all these are need for the HMO licence.
• Register as a Landlord BEFORE you buy the property. Why? Well, if you aren’t registered then the existing licence is deemed to lapse on the sale completing.  This would mea starting a ‘new’ application, rather than ‘renewing’ the existing licence in your name.
• Your registration number is required when applying for the HMO licence.
• If the property does not have a HMO licence, ensure that the property meets current HMO licensing regulations. Most importantly that the bedrooms are 2.25m wide and have a floor area of 6.5 square meters. Please refer to the Edinburgh City Council HMO licensing Standards, in particular Annex A.
• In the case of 3 bedroom properties whereby one of the tenants is also an owner (on the title deeds) of the property, a HMO licence is not required. Please bear in mind that if the property is to be let to 3 unrelated people in the future, a licence will be required.

Following Purchase

• Obtain proof of purchase from your solicitor, an email or letter. The local authority will ask for this when the HMO renewal application is submitted.
• Ask the previous owner to de-register the property against their name on the Landlord register. This is so that your own name can then be listed as the new landlord.
• The HMO renewal application must be submitted within 28 days of the completion date of the sale.
• If this deadline is missed, the application will be treated as being NEW and the property will be required to meet the current up to date regulations and standards. It can’t then be marketed or let as a HMO until the new licence has been received.
• Existing licences can be renewed without the latest regulations being retrospectively applied.
• A HMO site notice must be put up for 21 days from the day the HMO application is lodged. The site notice must be sent to the local authority following this mandatory display period. The site notice allows neighbouring residents to be made aware of the application.
• From 1^st November 2016, all safety and compliance certificates MUST be submitted with the HMO application which means it is important to ensure safety certificates are in place and in date. The application will not be processed unless all required documents are submitted.

HMO Licensing application process

• Following the licence application, the local authority will advise an inspection date. The inspection will take place at the property and the inspectors will check things such as the doors being 30-minute fire protection rated, that windows open and stay open, the width of bedrooms (minimum of 2.25m for new HMO applications) and the number of sockets in each room (6 required in each room, 1 required in the hallway).
• If there are any issues that the inspectors note as not meeting the required standards, then they will issue a written report detailing the faults. These must be rectified with 28 days and the inspectors will then re-inspect.
• Following confirmation of works having been carried out, the licence will be passed for grant. Assuming there are no objections from neighbours, you will then receive the HMO licence via email from the council. New or renewal of existing licences held by a previous owner (the seller) are issued for 1 year. Renewal licences thereafter can be renewed for either a 1 or 3 year period (varying fees apply) but the local authority has complete discretion.
• The renewal application must be submitted to the local authority prior to the licence expiry date or the licence will be deemed to have lapsed.
• The property cannot be tenanted unless either a) a renewal application for the existing licence has been submitted, or b) the new HMO licence has been granted and a copy of the licence received.

Examples of HMO licensing regulations and standards

Examples of standard HMO licensing regulations that must be met for NEW applications are below. There is a full copy of the current HMO standards available from The City of Edinburgh Council.

• Each bedroom and communal living/dining/kitchen area must have 6 sockets (3 double sockets).
• Every room in the property must have a hard wired, inter-linked smoke alarms.
• A bedroom must be a minimum of 2.25m wide.
• All doors off of the hallway must be self-closing with the exception of the bathroom. The doors must be ‘FD30 rated’ to provide 30 minute fire resistance.
• If a communal living area is available, the floor size of each bedroom must be at least 6.5 square meters.
• If no communal living area is available, the floor size of each bedroom must be at least 10.0 square meters.
• There must be at least one wet room and w.c. for up to 5 tenants, and at least two of each if there are 6 or more tenants.
• All fanlights must be fitted with 30 min fire protection ’pyro-glass’.
• Window sills must be at least 800mm from floor level, or safety bars or similar fitted to prevent a risk of falling or hitting the window, unless toughened safety glass is installed.
• Kitchens must have at least 2.0m of impervious worktop space for up to 3 tenants, and an additional 0.6m for each additional tenant thereafter.

So, it is quite a complicated process and needs to be handled carefully.  Planning ahead and knowing the rules are they key to ensuring stress-free ownership of your HMO asset.

We’re always delighted to help though so feel free to call or email our team if you have any HMO related questions!