Growing numbers of landlords are converting their rental properties into Houses in Multiple Occupation (HMOs) in order to optimise rental income. The main influences behind such a decision tend to be the promise of a growth in yield, coming from the opportunity to rent out rooms in cities and towns with a demographic leaning towards students and young professionals.

A conversion of a single occupancy dwelling into an HMO might cost a landlord money upfront, but the higher rents received will pay for that conversion within a year, most times. While the management of an HMO is more strenuous, with multiple tenants and the possibility of a higher turn over in tenants, our property management team can take the burden from you, the investor.

Before converting to an HMO you’ll need to consider what your tenants are going to need and how much space they’re going to require. It’s also important to think about what level of furniture and appliances you’ll be providing. It’s likely you’ll be converting the use of some rooms. For example, spare rooms may be converted to additional bathrooms and reception rooms to additional bedrooms.

You may also need to move or construct walls in order to alter room sizes – these are all aspects you’ll need to plan carefully before undertaking. And, of course, it’s advisable to use a professional when working on the more significant parts of the conversion. In many cases, traditional Victorian terraced houses could be ideal for HMO conversion, due to their spaciousness and the size of the reception rooms. For example, in a three-bedroom terraced house a landlord could convert one reception room and the loft into bedrooms to turn it into a five-bedroom HMO.

Converting reception rooms is often essential, but not always the right decision. In the perfect scenario, the property will have two reception rooms – one of which can be converted, leaving the other room to remain as a dining or living space. Tenants can sometimes be put off properties with no living room or reception space, so it’s something you’ll need to consider carefully.

Converting a rental property to an HMO can be an effective investment, but it does require more work and upkeep. Therefore, before jumping straight in, you’ll need to do your research, take your time and carefully compare the additional work and expense against the additional profit you’re likely to make.