Refurbishment of multiple letting unit property and Houses in multiple occupation.
All private rented Buy to let accommodation needs to be in a safe and of a reasonable condition for letting and in the interests of the occupiers of the dwelling, should be free of hazards and conditions that might put occupants health at risk.
Landlords purchasing or converting multi-occupied accommodation such as a house in multiple occupation (HMO) have additional legal responsibilities to conform to such as fire safety precautions and providing means of escape from fire, along with basic standards to ensure the occupants health and safety are not compromised by the condition of the accommodation. All private rental housing should be Safe and fit to live in following the general standards for private rented accommodation below
Standards private rented accommodation should meet
- Free from serious hazards – such as fire risks, electrical and gas safety concerns
- In a good state or repair: free from falling plaster, broken glass, and dangerous stairs.
- Property is warm and weatherproof: free from leaks and has adequate insulation
- Reasonably modern facilities: Bathroom and Kitchen – able to be maintained hygienically
- Ensure the condition of the property, its fixtures, amenities and supplied furniture are in good working order and safe to use.
- Adequate space and facilities for the number of occupants sharing the house
- Should not present any problems in securing the property from intruders
- Free from hazards that could put the occupant’s health at risk: Mould & Damp, Insect or vermin Infestations.
- Drains & sewage systems maintained to provide safe and hygienic drainage
Additional considerations for HMOs.
These considerations will vary upon size of building, layout, number of stories, number of occupants and type of occupancy.
Refurbishment of a HMO may involve simply updating the property just to bring the building up to standard to meet the current legislation for HMOs. Inspections are carried out under the Housing Health and Safety Rating System (HHSRS) which is conducted by the local council risk assessment officer to ensure the accommodation does not have any serious hazards and meets the current standards. The HHSRS replaces the former Fitness for Human Habitation test. For larger HMOs comprising several stories of the building and where there are 6 or more occupants then additional considerations and safety provisions may be needed in order to comply with additional legislation.
Licensed HMO and some self-contained flats
- Proper fire safety precautions are in place. Licenced HMOs must have smoke detectors, alarms, emergency escape lighting and firefighting equipment fitted in the building.
- Prepayment electric meters cannot supply any emergency lighting or alarm circuits.
- Habitable rooms are fitted with fire doors with automatic self-closers installed
- Provide safety certificates for all electrical appliances when requested
- means of fire escape
- Escape routes and stairways have restrictions of decoration materials used for fire safety.
- Maximum distance of travel rules to escape to a final exit are observed
- Fire resistance between floors and partition walls
- Annual gas safety checked and Electrical safety checked every 5yrs
- Where there are shared kitchen and bathroom facilities are suitable and adequate for the number of occupants sharing. For example If there are more than 6 persons sharing 2 cookers must be provided
- Bedrooms should have a fixed space heating appliance such as a radiator served by a central heating system
- Building layout should not present unacceptable hazard to the occupants
- Regulations as to the type of window opening, their dimensions, and position in the wall to allow for escape or entry by rescue services.
- HMOs within a building containing an other category of use ( such as offices or shops) must be structurally separated and afford at least 60 minutes fire resistance. Provision for independent protected escape should be made.
- Stairway enclosures (under stair cupboards) should not contain any unacceptable items ( Gas meters, heaters, cooking appliances etc)
Where housing does not meet minimum standards it could be considered unfit for human habitation. As such a prospective mortgage lender may not be able to advance funds since in the current condition of the accommodation is not fit for a tenant to reside. Most lenders will make a retention of part or full mortgage funds until problems have been rectified.
Where a part retention is made as total cost of works outlined in the valuation report (for example a total cost of works of £5000) the purchaser would firstly need to provide £5000 shortfall in mortgage monies in order to complete on the purchase. Then once legal completion has taken place, the purchaser would need to spend a further £5000 on the cost of actually carrying out the work to the property.
Therefore a retention causes a cashflow deficit of double the retained amount, and as such this could mean the purchase falls through altogether, unless the purchaser is able to forward fund £10,000 in addition to the deposit money. Once the work has been carried out to the required standard, the mortgage lender would then release the retention and refund the purchaser the £5000 as set out below: