Everything You Need to Know About HMO Insurance as a Landlord

Posted On Tuesday, 22 September 2020 20:32

Some landlords specialise in HMOs, while others are more inclined to shy away from the additional rules and regulations this type of investment property can bring. But if you haven’t considered investing in an HMO property you might be wondering how an HMO is defined – and how it will affect your landlord insurance.

The definition

If you are letting a property to three (or more) people who share facilities but aren’t from the same household then there’s a good chance your property will be classed as a ‘home in multiple occupancy’ ie an HMO.

Short term rentals (such as holiday homes) are usually excluded from this classification – your tenants will usually need to use the home as their primary residence in order for it to be classed as an HMO.

The legalities

The rules and regulations around HMOs are intended to ensure the property is safe and secure for its occupants, which is way HMO landlords have to meet additional safety requirements in addition to applying for an HMO licence.

For instance, unlike standard buy-to-let properties, HMOs must contain fire doors between the different areas of the property, which are intended to ensure the multiple occupants each have a clear path of exit from the building in the event of a fire.

Similarly, internal locking doors (such as bedroom doors with locks) should have thumb turn locks, which would mean the tenants would be able to escape in the event of a fire without having to search for the key.

Finally, HMOs require fire alarms in every bedroom, and depending on the size of your HMO you might be required to upgrade this system to a panel fire alarm.

The insurance

Landlord insurance is an important investment no matter what type of buy-to-let property you own, but when you have a home in multiple occupancy your HMO insurance could be even more important – although it’s also likely to be more costly.

HMOs are generally viewed as higher risk, particularly if your tenants tend to change on a regular basis. 

However, just because HMO insurance is more expensive than regular landlord insurance doesn’t you mean you have to pay through the nose for it. By comparing insurance quotes for HMO properties through a price comparison site you stand a better chance of finding a suitable policy at a competitive price. 

The final word

HMO properties can offer buy-to-let landlords a very healthy rental yield, particularly if the property is located in a major city or town where rental properties are in high demand.

These properties do carry a range of additional rules and regulations that you might not face with standard buy-to-let homes, though, so it’s important to weigh up the additional costs you might incur in order to install fire doors, thumb turn locks and panel alarms against the additional rental income you could realise from your investment. 

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