14 March 2024

Investing in a Buy-To-Let or HMO? Why tailored legal advice is crucial to build your portfolio

To let sign in front of home

Now occupying a fifth of the nation’s mortgage market, buy-to-let investments are on the rise again after a turbulent 2023. With inflation coming down from a 15-year high, investors are increasingly optimistic about the year ahead.

However, despite a promising opportunity to capitalise on investments as more people rely on buy-to-let properties, getting the best value from your portfolio can be a daunting task for landlords.

As the UK celebrates National Conveyancing Week (11th-15th March), I sat down with my colleague, landlord specialist, Siobahn Sylvester, to highlight the key concerns for landlords investing in the buy-to-let market - particularly those with a House of Multiple Occupancy (HMO). Together, we explored why tailored legal advice is critical to maximise your yield while minimising liabilities.

What is an HMO?

An HMO is a buy-to-let property that is occupied by three or more tenants that form more than one household. hey will each have a private bedroom but share communal spaces, such as a kitchen and bathroom. Larger HMOs consist of five or more tenants.

While an HMO can be a lucrative way of generating passive income for landlords, it comes with its own set of unique problems - namely in the form of complex and ever-changing regulations. Of course, there's also the daunting task of managing relationships with tenants and managing their expectations.

Essential support for HMO landlords

HMOs are an essential part of the UK housing market; over 500,000 HMOs in the country offer affordable housing to working professionals as well as those in further education, such as attending university. They are often used to house medical staff who need to remain near their place of work and are a vital lifeline to young professionals.

As with any investment, there will be peaks and troughs, but with bills now falling and inflation easing, three-quarters of UK landlords are confident of a profitable 2024. 

Expert guidance on handling tenancy disputes

Mortgage possession claims and eviction orders were up in 2023, which shows that being a landlord is a delicate balancing act. Enforcing your boundaries and ensuring your income while being tactful and sympathetic can be a challenge - but not for those buy-to-let landlords with astute legal advice at their disposal. 

Our conveyancing team offers a dedicated landlord service that specialises in providing valuable legal support to landlords. Among an array of services, the team excels at assisting landlords during tenancy disputes and the eviction process, to minimise risk to your property and protect your investment.

Navigate changing regulatory obligations

Your legal obligations as a buy-to-let landlord are frequently being updated, from changes such as ensuring the front door on your HMO meets locking standard BS8621 as well as ensuring all rented properties have an energy performance certificate (EPC) rating of C or above by 2028. The Deregulation Act 2015 also introduced widespread changes to a landlord’s legal liabilities during the eviction process of troublesome tenants, all of which can prove overwhelming for those without expert legal counsel.

Clarity on short-term or capital investments

Whether your HMO is a short-term investment prioritising monthly income or a long-term capital investment, as the value of the building increases over time, our team helps you to navigate complex and ever-changing market pressures. This advice and guidance can empower you to make informed decisions about the best time to cash in your investment. 

Whether you own a single property or a portfolio of HMOs, we offer tailored advice that is unique to your circumstances. For instance, should the opportunity arise to purchase multiple properties at once, we can execute careful planning to minimise your stamp duty and tax liabilities, ensuring you benefit from more of your investment. Our conveyancing team can also advise you on how to leave the market if you choose to sell your investment property to use the funds elsewhere, such as a retirement property or your next investment,

In-depth commercial knowledge

Our conveyancing team has an in-depth knowledge of complex commercial deals as well as the strict lending conditions of mortgage companies and the intricacies of the tenancy agreements and requirements. We know the right questions to ask and the right information we need to make sure these are a sound investment.

If you’re the landlord of an HMO property or are considering entering the buy-to-let market, get in touch with our expert conveyancing team today. 

Caroline Fletcher-Shaw, Wilkin Chapman LLP
Need help?

Contact Caroline to discuss this further.

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