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British term for shared residential properties

A house in multiple occupation (HMO), or a house of multiple occupancy, is a British English term which refers to residential properties where 'common areas' exist and are shared by more than one household. Most HMOs have been subdivided from larger houses designed for and occupied by one family. Some housing legislation makes a distinction between those buildings occupied mainly on long leases and those where the majority of the occupants are short term tenants. The definition of an HMO has its origins in fire safety legislation, following a series of publicised, preventable deaths in overcrowded buildings.

In HMOs, bathrooms and kitchens/kitchenettes are typically designated as common areas shared by all tenants, but contractually speaking common areas may also include stairwells, gardens and landings. Houses may be divided up into self contained flats, bed sitting rooms or simple lodgings. Legally compliant HMOs are characterised by a higher standing of fire proofing, after a series of deaths in overcrowded houses. According to the Campaign for Bedsit Rights, three people a week died in fires in houses in multiple occupation (HMOs) between 1985 and 1991.

The Council Tax (Liability for Owners) Regulations 1992 provide a different definition of HMO that is used solely for determining Council Tax liability. Typically, the landlord is required to pay Council Tax on behalf of tenants.

HMOs living spaces are often smaller but typically cheaper than a one bedroom flat. HMO agreements often include most utility bills with the rent. This is because it is difficult for landlords to apportion the cost of bills to each tenant fairly and it is also more appealing to potential tenants.

Northern Ireland is a separate legal jurisdiction within the UK and all HMOs must be registered and must comply with certain standards and obligations. In Northern Ireland a property is an HMO if three or more people live in it, these people form at least three separate families or households and at least one person is paying some form of rent to live in the property. New regulations came in to force in April 2019 and a new licensing scheme managed by local councils has replaced the centralised registration scheme. Landlords must pass a fit and proper persons test, fixed penalties have been introduced HMO managers have to adhere to a Code of Practice. An HMO in Scotland is a property that is shared by three or more tenants who are not members of the same family or household. The landlord must be "a fit and proper person" and there are annual inspections to check the property (2006 Act). At the end of March 2019 there were over 15,600 licences in force and 87% of these were accounted for by the four major cities and the Fife local authority (Aberdeen, Dundee, Edinburgh and Glasgow). Edinburgh accounts for almost two in five of Scotland's HMO licences due to its higher rents, large student population, tourist lets and young professionals sharing.

HMOs are popular with buy to let investors because, it is believed, they have higher income generating potential than ordinary or 'vanilla' buy to let properties. By splitting single properties into multiple bedsits that are each let out on separate tenancy agreements, landlords can also reduce their exposure to loss of earnings through rental arrears or voids. While HMOs may generate higher income, HMO investments, at least in heavily regulated Scotland, entail significantly higher initial costs if compared with regular buy to let properties due to significant costs of licensing, safety checks and certificates, fireproofing, alarms, joinery and other required remedials.

Some argue that HMO investment is necessitated by insufficient housing supply in the UK, whilst others argue that it is exploiting it.

Due to the additional legal requirements placed upon HMO landlords, many buy to let mortgage lenders refuse to finance HMO properties. This has led to the emergence of a specialised HMO mortgage market, catered for by a smaller subset of lenders. Because the choice of products is narrower, HMO mortgage borrowers are often subject to stricter criteria. Often they need larger cash deposits, as the average loan to value ratio is slightly lower than for an ordinary buy to let mortgage, while the minimum property value tends to be higher. Borrowers who are financing unlicensed HMOs may also be required to prove that their local authority has no intention to license the property in the future. It is also common for HMO mortgage lenders to levy stipulations on various aspects of the property, including the number of rooms permitted, the type of tenancy agreement and the type of locks installed on internal and external doors.