For many new landlords, getting started in the industry involves finding out a lot of facts they might not previously have known. As insurance brokers with a specialism in property we often hear from investors who are unfamiliar with some of the jargon used. This is not just about matters such as tax and regulation; we are also often asked about property types.
Two of the most common terms are bedsits and homes of multiple occupancy (HMOs). The differences between the two are significant and need to be understood.
A bedsit is a single unit within a home where the tenant is renting a room, but shares other facilities such as a kitchen and bathroom with other people living in the same building. An HMO, however, is defined as the whole residential building containing different bedsits, or rooms occupied by different renters who are defined as separate households from each other. There must also be a minimum of three people living in the building for it to be deemed an HMO. Basically, a bedsit is a single unit and an HMO is plural.
A landlord’s insurance policy must be tailored to account for these classifications. It should also be noted that because of the definitions that apply to an HMO, it is possible that a landlord can rent out bedsits that are not part of such a property – such as where there are two bedsits occupied by single people.
In some situations, landlords will need a licence to rent out an HMO. This applies if it is rented to five or more people constituting more than one household, or is at least three storeys high. However, some local authorities may choose to apply more stringent rules, so it is worth checking if a licence is needed for any HMO. A separate licence is required for each property and failure to have one – or renew it before it expires after five years – can incur fines of up to £20,000.
For further advice about insurance for bedsits and HMOs, contact our property team on 0844 335 0371 or contact us via our web contact form.