When buying an home of multiple occupancy or HMO property for the first time there are plenty of checks to make to protect yourself from council fines.
Firstly have you checked whether or not your property falls under the HMO umbrella. The easy way to do this, is to contact your local council and find out whether or not your property will clarify as an HMO and will therefore need an HMO licence.
What defies a property as being an HMO?
The usual trend is, if your property has 3 floors it will definitely fall inside the HMO bracket. This is not always the case though, so if you are thinking of operating this type of property for the first time, check with your council.
Once you have your HMO and you have completed on your purchase you will need to buy insurance for the property. Getting your HMO insurance correct is crucial, as if you do not notify insurers that it is being let with multiple tenancy agreements and you have a claim, then you could easily find out that the insurers will repudiate any claim.
When buying HMO insurance sometimes investors spend 3 months converting a house into a multiple occupancy property. So the most important thing to do here is to notify the insurer that the building will be unoccupied for 3 to 6 months until the work is complete, and then you will be occupying with tenants. A perfect insurer is one that will assist with this and will not have to cancel then charge you fees.
There are different types of tenants that will be interested in renting this type or property. Usually they come as a large mix of :
- Working Professionals
- Students
- DSS non referral (tenancy agreement between tenant and landlord)
- DSS referral ( tenancy agreement between council and tenant)
- Homeless
- Asylum seeker
Once you have disclosed this information it is then important to work out what loss of rent you would like to be paid if there was a claim and over what period. You may also want to add on rental guarantee to protect yourself against any default in payments by the tenants.
Do you have the right cover?
The next step is then to make sure you are covered for accidental damage and malicious damage … remember lots of insurers have many exclusions so you need to be wise when buying so you know exactly what you are and aren’t covered for.
You can also purchase :
- Legal Expense
- Terrorism
- Employers liability ( public liability should come as standard but check !!)
When buying an HMO and you want the best insurance for your property,it is best to go to a professional, someone who knows what they are talking about and would place your risk with ease. Remember it is not about cheap cheap cheap , insuring your property is about protecting your investment and that is what the team at Goldcrest Insurance will do. Feel confident that we know our business.
