In this article, I take you through the ups and downs of a recent case in which we managed to win planning permission to convert a Victorian townhouse in Northampton, in an Article 4 area with no PD rights, from three flats to a large 16-person, 10-bedroom HMO and share with you some of the things we did to help get this over the line.
In doing so, we helped the client to double the value of the property and create an income stream of £85,000 pa!
HMOs: What’s the attraction?
HMOs (houses or flats occupied by more than 3 unrelated individuals sharing amenities) are not often popular with Councils, especially ‘large HMOs’ (i.e. 7 or more people sharing, or known as ‘Sui Generis’ use). Any change of use to large HMOs (including from an HMO of 6 or fewer tenants, known as a small HMO or ‘Class C4 Use’) requires planning permission, as does a change to Class C4 use in Article 4 Area.
Councils are concerned about increased traffic and parking, ‘noisy neighbours’ and more comings and goings, and refuse and litter. Internal space standards can be poor as well. However, in some towns, in certain parts, Councillors prefer longer term residents and families, instead of students and single professionals.
So, looking to buy a property to convert into an HMO can be fraught with local ‘political’ risk, which can lead to lots of objections to planning applications. On top of that, some investors and developers can be turned-off from the actual or perceived management hassle of dealing with tenants and their problems.
However, for those willing to take on the challenge, the rewards can make up for these hurdles and you can turn a house into a potential ‘money machine’.
The best returns often can be found in the larger properties, where you can go for a large HMO – but this is also where there can be the greater challenges. Of course, more inexperienced investors might be ‘scared off’ by such opportunities, so there can also be fewer competitors!