How to Sell an HMO Property Quickly?

If you own an HMO (House of Multiple Occupation) and decide that you’d like to sell, you need to take a different approach than you would if selling a regular property. This can often make selling a little bit more complicated, especially if you need or want a quick sale.

Luckily, there are options available that ensure a fast and seamless sale of your HMO, such as a cash house buyer. In this blog, we explain what they are and how you sell your tenanted property without hassle, cost and delays.

What is an HMO?

Before we go any further, let’s clarify what an HMO is. An HMO, or House of Multiple Occupation, is where at least three tenants make up two or more rent-paying households within one property. They will share a kitchen, bathroom and toilet but have individual living spaces. Once five or more tenants live in the space and form two or more households, the HMO is defined as a large HMO.

You’ll find many shared houses considered as HMOs, including student properties, hostels and lodges.

Is it hard to sell an HMO quickly?

It can be. Whilst it is certainly possible to sell an HMO quickly, it is important to consider the factors that could slow down or stop a sale.

1.      Tenants in situ

Many, if not most, HMOs will have tenants in situ. This can help a sale be achieved much more quickly, but it can also slow things down. Some buyers don’t want the hassle of dealing with existing tenants and prefer to find their own or may even have other plans for the property.

2.      Limited buyers

The pool of buyers for an HMO property is different from what you would find when buying more regular properties. In fact, it is considerably smaller. This is because most HMO buyers are either investors or landlords.

3.      Estate agents may not want to sell it

HMOs can be complex, and many estate agents may prefer to avoid them and focus on properties where their experience and reputation lie. Even when some estate agents do decide to take the plunge, their lack of HMO experience will likely be telling and could impact your sale.

4.      Buyer’s lack of knowledge

HMO properties are purchased to generate rental income, yet some buyers may not fully understand the complexities of running an HMO and the licenses required.

5.      Lack of finance options

Securing the finance for purchasing an HMO can also be quite difficult, making it harder for the sale to progress. Sometimes this could see the sale drag on for much longer than necessary, and at times it may even collapse.

What is the best way to sell an HMO quickly?

There are a few ways you can sell an HMO, with some being significantly quicker than others.

Estate agent

You can sell an HMO with an estate agent, but as we mentioned earlier, not all estate agents are capable or experienced enough to manage the sale. This could result in a complicated, slow, and expensive sale. In some cases, it might not even happen at all, especially if the agent doesn’t market the property to the correct type of buyer.

Auction

Selling an HMO via auction is a possibility. Many investors and landlords choose auctions to snap up a bargain, so auctions are often a great hunting ground for buyers. The sale is typically fast and takes around a month to complete. A deposit is paid upon the gavel falling, meaning there is minimal chance of a buyer backing out. There is no guarantee of a sale, and the price may fall short of what you were expecting. Furthermore, the fees charged by the auction house not only eat into your sale but will also need to be paid each time you try to sell.

Specialist HMO buyer

Choosing a specialist buyer may prove your best option. Cash house buyers like Sell House Fast can facilitate a speedy sale and will gladly take on tenanted properties without any concern. The price they pay can be lower than market value, but the sale is guaranteed and happens in a timeframe that suits your needs. This can be as quick as seven days. Perhaps a further incentive is that many cash house buying companies sell your house for free, as they don’t charge any fees either, meaning you receive all the cash generated from the sale.

How can I help get the fastest sale of my HMO?

Selling an HMO isn’t as straightforward as selling a normal residential property. You require an abundance of paperwork to satisfy the buyer and any existing or future tenants. Having these to hand will speed up your sale and help answer any questions a buyer may have. These include:

• Your HMO license if one is required.
• Safety certificates for the property.
• A valid EPC.
• Maintenance records for the property.
• Proof of planning permission. Converting a single residential property into an HMO does NOT fall under permitted rights, and instead requires planning approval.
• Floor plans for the property.
• Fire risk assessments.
• Test certificates for fire alarms and emergency lights.
• Tenant information and copies of the tenancy agreement.
• Rent history for the tenant(s).
• HMO accounts.
• A management contract if an HMO Manager is in place.

Whether selling with an estate agent, an auction house or with a cash house buyer, you should have all this documentation readily available.

When do I tell the current tenants that I am selling my HMO?

You should inform tenants at the earliest opportunity and even reassure them that their living arrangements are unlikely to change. Many HMO buyers want to secure property with tenants in situ, as it removes a task from their workload. There is actually no legal obligation to notify your tenants of your plan to sell an HMO, but you should give them fair notice of viewings (at least 24 hours) and ensure their tenancy agreement is not compromised as a result of the sale.

However, if you plan to sell the HMO with vacant possession, you must serve the appropriate notice to all tenants.