HMO (House Of Multiple Occupancy) Insurance
What is an HMO?
HMO stands for House of Multiple Occupancy. This can include bedsits, purpose built and converted flats, and student accommodation.
A household consists of either a single person or members of the same family who live together.
HMOs have become increasingly popular over the past decade, for both landlords and tenants. Landlords are able to get higher yields and higher monthly profits by letting properties by the room. Whilst tenants can get a private bedroom with shared facilities for a convenient all-in-one monthly rent (which can cost a lot less than renting a whole property), and the arrangement might suit students in particular.
Insurance for HMOs
When buying buildings insurance neither traditional residential home insurance nor landlords insurance will suffice. In fact, if you use either of these types of insurance to protect your HMO, the cover may typically be invalid. HMO insurance falls into a specialist category and most Insurers aren’t able to cover HMOs.
Houses of multiple occupancy are considered by insurers to be high risk. By definition, it is a property with multiple occupants, with facilities that are shared by several households, meaning lots of footfall. There are common areas and the use of share facilities, where there may be a greater risk of damage. There is also the unfortunate stigma associated with all HMOs as being converted bedsits, with a faulty kitchen in every bedroom, occupied only by irresponsible tenants.
If you are thinking about buying an HMO or converting your existing buy to let property into an HMO, it is important to remember that you need specialist HMO insurance that recognises the particular risks involved, yet provides you the cover you need.