Everything You Need to Know About HMO Landlord Insurance
Many property owners these days are opting to open up their property as a House in Multiple Occupation (HMO). HMO properties are sometimes referred to as ‘house shares’.
Before you get started with renting out your HMO, it’s important to have all of the paperwork in order so that you don’t skip your HMO landlord responsibilities.
In order for a property to be considered as an HMO, as defined by the Housing Act 2004, it must:
- Be rented out to at least 3 people who form more than one household (that is, not a family). The tenants share facilities in common like the bathroom and kitchen.
- Be rented out to more than 5 people living in the same household. The tenants share the toilet and kitchen facilities, as well as bathroom. At least one tenant pays the rent or their employer pays it for them.
- Even if your rental property is smaller and let out to fewer people, you might still be required to obtain a licence from the council.
This selective licence scheme depends on the area your property is located in, so make sure you ask the council.
If your property meets these conditions, then one of the principal legal requirements you must meet is to have an HMO licence.
Note that you will have to pay a licence fee determined by the council upon submitting your licence application.
Want to know what you need before committing to making your property a HMO? Here are some more specifics regarding your HMO landlord responsibilities:
There are strict guidelines for minimum room size requirements
Rooms used for sleeping one person aged 10 years or over must not be less than 6.51 square metres.
Rooms used for sleeping two people over 10 years of age must not have an area less than 4.64 square metres.
Obligation to notify the local housing authority of any room in the HMO with a floor area of less than 4.64 square metres.
Any room in the HMO that has a floor area of less than 4.64 square metres must not be used as sleeping accommodation and must be reported to the authorities.
Renovations to the property
It is your responsibility as a landlord to ensure that the overall condition of the property is suitable for comfortable living.
The key things to think about are space, layout, facilities, furniture and working appliances.
Any renovations or decoration must be undertaken prior to renting out the rooms.
Do safety checks
Fire safety is of paramount importance in any property rented out, so it is one of your main HMO landlord responsibilities to ensure that you install and maintain smoke alarms and obtain all of the relevant fire safety certificates.
You must provide safety certificates for all of the gas appliances in your property to the local authority and send the council an updated gas safety certificate every year.
Notify local housing authorities
Note that you need an HMO licence for each HMO property that you run. If you don’t have a licence you can be charged a fine by the local authorities.
Also be aware that the licence runs out every 5 years so you must make sure that you renew it before it expires.
There is no legal obligation to take out an HMO insurance policy, but many mortgage lenders require it as part of their terms and conditions.
That’s because an HMO property is at higher risk of damage, whether malicious or otherwise, due to increased footfall by multiple occupants. There is also an increased chance of a tenant filing a claim for loss, damage or injury on your premises.
It makes sense, then, that any landlord would see HMO insurance as an investment and one of your HMO landlord responsibilities.
What does HMO Insurance cover?
HMO insurance is not the same as standard building and contents insurance.
There’s no one-size-fits-all policy for HMO properties. Instead, you’ll be covered for the basics and then can choose from optional additional covers.
HMO Buildings Insurance, which covers the building, fixtures and fittings, against fire, flood, theft, and other hazards. This covers costs associated with repairing or rebuilding the property in the aftermath of hazardous situations.
It is amongst your HMO landlord responsibilities to look after repairs for features such as sinks, toilets, and radiators. Taking out HMO insurance is the most sensible option to protect the features of your property.
- Landlord Contents Insurance – including contents in communal areas., if they get stolen or damaged.
- Landlord Liability Insurance – covers legal costs and compensation for injuries or loss on your property.
- Unoccupied Property Insurance – for times when the property is vacant, e.g. student summer holidays.
In the case that one of your tenants inflicts malicious damage upon your HMO property, you would need to procure additional cover to insure against it.
How Much does HMO Insurance Cost?
The cost of HMO insurance varies depending on the size of the property and where it is located. The differences in prices can be considerable.
If you’d like to know more about HMO insurance, get started on your HMO journey as an HMO property landlord, or get clued up on your HMO landlord responsibilities, get in touch with one of our friendly professionals today.