In this article, kindly supplied by rent to rent expert, Katrina Jones, she shares her 10 point compliance checklist for HMOs / rent to rent.
Over to you Katrina!
All our Rent to Rent academy graduates, and the staff at Kendall Bailey, will go through this checklist with a fine-tooth comb every time they take on a new Rent to Rent property.
As a business owner or
managing agent, the following areas
are your responsibility -- so please
make sure you do the following 10
things every time you invest in an
It’s taken me just over four years to build Kendall Bailey as a handsfree business -- although if I’d have listened to the people who really did know best and had already done it themselves, without trying to do it all by myself, I could have easily knocked at least two years off that timeframe.
So, in light of my stubborn years, I thought I’d share a few of my top tips to save you years of your life, and £10,000s -- so that you can create a hands-free rent-to-rent (or HMO) business as quickly as possible.
No matter what type of property you are taking on as a Rent to Rent -- existing HMO or residential -- it is crucial that you call the local council and double check with both the Planning department and the Licensing department, to find out exactly what regulations need to be met.
Remember -- planning and licensing are two separate departments, and it’s always important to get their response via email and file it for future reference.
The penalty for managing a licensable HMO without a licence can be up to £20,000, and some councils have additional regulations which will often change or be added too.
list of repercussions and potential
costs of not doing this is extremely
long -- so make sure you do this every
As a Rent to Rent company, you are responsible for the safety of your tenants.
We use a professional local fire company to go through every property we take on, to ensure that all fire & safety regulations are being met.
You should always renew your fire risk
assessments annually, and carry out
fire alarm and emergency light testing
every week/month (depending on
the type of property etc), logging it
in a fire book which should be kept
in a fireproof, locked box within the
The landlord should always have building insurance in place.
Ensure you have a copy of this for your records, and that it hasn’t expired.
With contents insurance, landlords can usually add this to their policy for approximately £20 - £40 extra per year.
The tenants are then responsible for their own personal contents insurance.
If the landlord isn’t willing to add
contents insurance to their policy, you
can either pay for it on their behalf
(as it will be worth it), or take it out
If you are taking on a fully licensed HMO, it is usually the case that the property would have been purchased on the correct type of mortgage for the property.
However, we always double check and recommend that you do too.
If you are taking on a property that is being converted from a residential property to an HMO, it’s essential you make sure the property is on the correct mortgage product before you continue.
You can also credit-check your
landlord to check they have never
missed any mortgage payments, and/
or agree with the landlord to pay the
mortgage directly to the mortgage
company, to ensure a payment default
Always ensure you have up-to-date copies of the current HMO licence (if required), the gas safety certificate, electrical safety certificate and PAT testing certificate.
A copy of the EPC is
also needed for each property.
This is self-explanatory; it is always a smart idea to put by more money than necessary for voids periods and tax.
It is a wonderful feeling at the
end of the year when you have more
than enough money left over because
you’ve been sensible throughout the
You will need cover of around £2m for Professional Indemnity and Public Liability insurance for your Rent to Rent company; however, feel free to take advice from your own professional mortgage broker.
should cost you around £20 to £40
per month as a company.
You can be fined up to £5,000 if you are a landlord or Rent to Rent managing agent, and have not registered to become part of the Property Redress Scheme.
information can be found at www.theprs.co.uk
I recommend a deposit scheme whereby the deposits you lodge cannot be touched by anyone other than the Government Approved Deposit Scheme.
This ensures all deposits are secure until you or the tenant claims it back.
If you do not register a tenant’s deposit
within 30 days, you are liable to be
When calculating your figures on a Rent to Rent deal, always base them on a conservative rent to begin with to ensure the deal stacks up and then do your best to help your potential tenants spend their budget.
Don’t base your initial figures on the highest rents you hope to receive, as you will be leaving yourself no wiggle room at all.
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