Landlords have two main options when renting out a property: single occupancy or a House in Multiple Occupation (HMO). Each option comes with its own benefits, challenges, and legal requirements, so deciding whether to rent your property to a single occupant or multiple tenants can be a tough decision. In this blog, we’ll discuss the differences between single occupancy and HMO to help you decide which option might be best for you.

Single Occupancy

Single occupancy refers to renting out your property to one person or one household (a family unit). Here are some benefits and challenges to consider when choosing this option:

Benefits of renting to a single occupant:

• Easier tenant management and communication
• Lower wear and tear on the property
• Generally easier to find tenants
• There are fewer legal requirements that the landlord needs to present to the tenant 

Challenges of renting to a single occupant:

• Lower rental income potential
• Potentially greater financial risk if the tenant defaults on rent due to their sole responsibility for the rent
• No shared responsibility for property maintenance and upkeep

It’s also important to note that the legal requirements that landlords must have in place when renting to a single occupant, which includes the following:

• Gas safety certificate
• Electrical safety certificate
• Energy Performance Certificate (EPC)
• Smoke and carbon monoxide alarms

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HMO (House in Multiple Occupation)

A House in Multiple Occupation (HMO) is a property rented out to three or more tenants who are not part of the same family unit. Here are some benefits and challenges to consider when choosing this option:

Benefits of renting to multiple tenants:

• Higher rental income potential
• Shared responsibility for property maintenance and upkeep
• Reduced financial risk if one tenant defaults on rent
• Greater flexibility in the types of properties you can rent out

Challenges of renting to multiple tenants:

• More complex tenant management and communication
• Greater wear and tear on the property
• More legal requirements for landlords

The legal requirements for landlords in regard to renting out an HMO differ slightly from single occupancy, and include the following:

• HMO licence (depending on the number of tenants and the type of property)
• Gas safety certificate
• Electrical safety certificate
• Energy Performance Certificate (EPC)
• Smoke and carbon monoxide alarms
• Fire safety measures, such as fire doors and fire extinguishers

Comparing Single Occupancy and HMOs

Now let’s compare the two in terms of rental income potential, property maintenance and upkeep, tenant management and communication, and financial risks and considerations:

• Rental income potential: HMOs generally have higher rental income potential due to the multiple tenants. Single occupancy properties may have lower rental income potential, but also lower financial risk
• Property maintenance and upkeep: HMOs require more maintenance and upkeep due to the higher number of tenants, so you will likely have to deal with less wear and tear with single occupancy properties 
• Tenant management and communication: HMOs may require more complex tenant management and communication due to the higher number of tenants
• Financial risks and considerations: compared to a single occupancy property, HMOs have reduced financial risk if one tenant defaults on rent due to the shared responsibility for the property

Making the Decision

Now that you’ve weighed the benefits, challenges, and legal requirements of single occupancy and HMOs, how do you make the decision?

Here are some factors to consider:

• Assessing your property and its suitability for single occupancy or HMO
• Evaluating the rental market in your area
• Considering your own capabilities as a landlord
• Seeking professional advice

When making the decision to rent your property to a single occupant or multiple tenants, it’s important to take into account a variety of factors, including your goals as a landlord, the market conditions in your area, and your personal preferences and capabilities. By weighing the benefits and challenges of each option, and seeking expert guidance where necessary, you can make an informed decision that will help you maximise your rental income while minimising your risks as a landlord.

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