HMO Valuation in Plymouth

Overview

Houses of Multiple Occupation (HMO) are defined by the Housing Act 2004 to be a property which is let to two or more households, is not self-contained (i.e., includes shared basic amenities such as a kitchen or WC), and the property must be the tenants’ only or main residence.

During an inspection of a HMO we measure the property using IPMS3C (to meet the RICS Property Measurement requirements) and must measure each room to ensure that they meet the minimum room size set by the Licensing of Housing in Multiple Occupation (Mandatory Conditions of Licenses) (England) Regulations 2018. For single occupancy rooms this is 6.51m2 whilst for double rooms this is 10.22m2. Further to this, any floor area where the ceiling height is less than 1.5m must be disregarded and attic rooms must have a ceiling height of 2.14m for a minimum of 75% of the floor area. However, these room size requirements could be increased depending on the location due to local authorities being able to exceed the national requirement and impose their own requirements.

HMOs which are currently let out to tenants are valued using the income approach and investment method of valuation. When valuing a HMO on an investment basis we use recent investment sale evidence, supported by our knowledge and understanding of the local market and a range of other factors such as location and condition, to calculate a yield for the property. We typically adopt a gross yield when valuing HMO properties. Due to the nature of a HMO  there can be variations in costs occurred by the landlord, for example utilities and management fees. Therefore for consistency we exclude any deductions of cost to this effect.

Situation

Due to the presence of the University of Plymouth, there are a large number of HMOs in Plymouth – in particular within Mutley Plain. In order to value a HMO in Plymouth, the valuer must have a detailed specialist knowledge of not only HMO rental and capital valuations, the local authority’s policy requirements of HMOs, and a thorough understanding of the regulations affecting the HMO sector, but also the local market in Plymouth. Without this expertise incorrect market values could be calculated.

Solution

Our Plymouth valuers ensure they have a detailed specialist knowledge of HMO rental and capital valuations, the local authority’s policy requirements of HMOs, a thorough understanding of the regulations affecting the HMO sector and the local market through carrying out HMO valuations regularly experienced in carrying out a wide variety of HMO valuations across Plymouth and possess the knowledge of the local market to accurately value these properties.

Outcome

We were able to provide an accurate valuation based on our local knowledge of the market, and using our specialist HMO valuation expertise. Our valuers are experienced in carrying out a wide variety of HMO valuations across the south-west and would be pleased to discuss any HMO valuation queries.

Key Contact

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