2 bedroom flat- renting three rooms out seperately

bobbydavro

Hi all,

my friend has a two bedroom, flat/ semi detached house.

There are three options for renting it out:

Renting the flat out as one, ie to a couple for £850 pcm

Renting out two separate rooms, £425 each pcm so again total of £850pcm

Or,
the third option which I think is the best
As there is a large sitting room, turning this into a bedroom and renting out three separate rooms at £425 each total of £1275pcm.

Now I now this sounds greedy but from a purely financial point of view it makes sense!

What I wanted to know what are the implications of letting out three rooms in a two bed house. Other than the people living there will have no communal dining area etc. Are there any health and safety laws or such.

Is the third option a viable and suitable one? As single rooms in this particular area are in very high demand.

Thanks for taking the time to read and any advice much welcome.

Regards

BD

agrinnall

Depending on the local authority rules letting to three separate people may require the property to be registered as a HMO.

BitterAndTwisted

The third option would probably mean that it will have to confirm to HMO regulations. This will mean fire-doors, a hard-wired fire-alarm and other things depending on the local authority's criteria, often a hefty fee to have the license granted. I've heard of a £700 fee.

Wear and tear will be more, so carpeting and re-painting will have to be done more often to maintain that level of rent and keep it attractive, as well as much more heavy use of appliances, especially washing-machine, dish-washer etcetera.

Sharing a property with absolutely no common space will render it less attractive. Even house-sharers don't welcome having to eat in their bed-rooms.

HappyMJ

A landlord of a HMO has to pay the council tax on behalf of the occupiers unless all the occupiers are students when there wouldn't be any council tax to pay. A landlord of a HMO usually pays all the utility bills too so make sure the numbers add up.

A dining room is not required they can eat in the lounge so just make sure there is enough room for everyone to dine at once if they were to choose to. Renting to single people only might be the easiest option to ensure there isn't an issue with overcrowding.

easilydistracted

I don't think your maths make sense. I would be very unusual for the three situations you describe to result in the same rent per room. You'd also not retain long term tenants. If the flat has so much space that using the living room as a bedroom will not be horrible then the overall price would be more attractive. If you are that desperate would be better to rent to two couples.

Kynthia

So there would be one bathroom, one kitchen (what size?) and no other communal space? If so then in addition to what others have said, I think you would get less rent per room as it's almost a bedsit rather than a room in a shared house. Plus you may need to have a cleaner and gardener as well as pay the bills yourself as these three renters are unlikely to be a 'household' and do these things themselves. Then the type of tenants you attract might be different, as they'd be the type that are happy with a more bedsit environment with bills included, so may be less friendly and not as good with money, so do you want these tenants? However you may still feel that it's financially worth it.

Badger_Lady

Say that, because the property is less attractive, in the third option you can actually only get £350 per month. And for the sake of argument let's assume that you don't need to register as an HMO (though in my council you would and my fees start at £800 plus significant modifications).

So three rooms at £350 a month is £1,050. Still sounds better, right? In fact why not install bunk beds and charge £200 per bed - then you could up it to £1,200!

However, the risks you take as a landord increase with the number of individual tenants. In general the type of people who rent overcrowded spaces are the type of people who don't have good, reliable incomes, don't prioritise their rent payments and don't have respect for the property. After all, the landlord isn't respecting them or offering them a high quality lifestyle, so why should they be concerned with protecting his assets?

Prime candidates would be students, asylum seekers and the unemployed. All fine people - most of us have belonged to at least one of these categories at some point - but not known for being the most reliable tenants.

You may find yourself dealing with a higher turnover of tenants (and therefore higher recruitment / vacancy / changeover costs), more 'wear and tear', possibly even damage that, even if within deposit amounts, would incur legal costs and effort to claim compensation for. And in the worst case you can end up with tenants that just will not be evicted, leaving you with no income at all and a rapidly declining property.

Forgetting the figures for a minute, imagine the stress.

(Of course these are risks in any case, they are just reduced when the standard / quality is higher.)

Personally, if your figures are right and the flat really can achieve £850 as a whole, I would stick with Option 1. It's the easiest to manage, the most morally sound and is likely to attract the a more mature, stable tenant with whom your friend can enjoy a lucrative relationship.

In my case, I could only get around £550 a month for my whole house or I can get £750 by letting rooms to a mature single bloke and to a couple. If I could get £750 from one family unit, I would.

donfanatico

you are pushing it a bit

DaftyDuck

Option one would probably give the best return, you are more likely to find a stable long-term tenant with whom you will have a better working relationship, who will more likely care for the property, leave you fewer voids and much less hassle. Wear & tear will be significantly less - as will establishing responsibility for any damages that do occur... which is a major negative to cramming a house as full as a sardine can.

Marco_Panettone

Which scenario would you want to live in? Stop seeing the pound signs and see the people.

00ec25

Marco_Panettone wrote: »

Which scenario would you want to live in? Stop seeing the pound signs and see the people.

he IS running a business so should see the £ signs. He is not running a welfare service for the disadvantaged