HMO landlord Insurance

Posted: 16th Mar 2016

Notting Hill colorful houses at Portobello, west London.If you are the landlord of a house in multiple occupation (HMO), you need to be aware of special rules and licensing arrangements which apply to such dwellings and to the special conditions which may attach to the insurance you arrange to safeguard your property and your buy to let business.

What is a house in multiple occupation (HMO)?

An HMO is a distinct form of let property, essentially different from privately let self-contained accommodation.

The official government website – last updated on the 3rd of January 2016 – defines an HMO in the following terms:

  • at least 3 tenants live in the property, which they occupy as more than one household unit; and
  • there are shared facilities – such as the kitchen, bathroom or toilet – for those separate households.

Examples of HMOs

Let property which might fit this description includes:

  • shared houses or flats where those sharing are not members of the same family;
  • houses which are sub-divided into separate bedsits;
  • bed and breakfast hotels that are used on a longer-term basis than for holidays;
  • hostels; and
  • accommodation which is shared by students – with the exception that student halls of residence and other types of accommodation owned by colleges and universities are not generally classified as HMOs.

Licensing

Some HMOs require a licence from the local authority in order to be let as such. That is the case if:

  • the building is more than three storeys high; and
  • the HMO is occupied by more than five individuals.

In addition, the local council may set its own rules and requirements governing the licensing of HMOs, with the overall aim of ensuring compliance with the relevant fire regulations and in order to ensure that tenants who are sharing such accommodation are provided with a decent standard of facilities.

HMO landlord insurance

It is evident, therefore, that HMOs differ in their nature and use to self-contained let accommodation.

The difference may be enough for some insurers simply to decline a landlord’s application for the necessary insurance. In other cases, insurers may consider the risks sufficiently great to increase the price of premiums over and above the rate applied to other forms of landlord insurance.

At Cover4LetProperty, we recognise the differences likely to be encountered in running an HMO business as opposed to other forms of buy to let, but are nevertheless firmly of the view that HMO landlord insurance is as essential and needs to be as readily available as standard forms of landlord insurance.

We are happy to scour the market on your behalf, therefore, to identify policies suitable for HMO landlords and aim to offer quotes that are just as competitively priced as landlord insurance in general.

Whatever difficulties you may be facing in securing insurance as an HMO landlord, however, it is important that your insurer is aware of the type of accommodation you have to let. The fact that it is an HMO is likely to be considered a “material fact” affecting the insurer’s assessment of the risks and your disclosure may be regarded as an expression of your “utmost good faith” – a principle well enshrined in English law relating to insurance contracts.

HMO landlord responsibilities

As an HMO landlord – and under the terms of any licence granted to you by the local authority – you bear a number of responsibilities, many of which are shared by all landlords, but some of which are reserved for HMO landlords alone.

The principal responsibilities are described in a number of sources, including the housing charity Shelter, which lists the HMO landlord’s responsibilities as follows:

  • ensuring that the accommodation is not overcrowded;
  • providing adequate washing and cooking facilities;
  • complying with all local fire safety regulations, including the installation of smoke and carbon monoxide detectors (requirements which have recently been extended to all private rented accommodation);
  • inspection and testing of electrical installations at least once every five years;
  • the maintenance of shared and communal areas in a clean and good state of repair; and
  • the provision of a sufficient number of rubbish bags or bins for the number of individuals living on the premises.

It is important that you comply with these and any other obligations and responsibilities set out in your licence from the local council, since your failure may result in hefty fines or even an order to repay up to 12 months (or the equivalent amount in housing benefit.

As any other landlord, you are responsible for the exterior structure and fabric of the building, its water gas and electricity supplies, toilets, baths, sinks and basins, and any fixed heating radiators and water heaters.