HMO Property Management Fees Explained: Services and Costs

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Learn about typical HMO management fees and services. Fraser Bond offers expert advice on managing your HMO property and maximising rental income.

HMO Management Fees: A Guide for Landlords

Managing a House in Multiple Occupation (HMO) can be more complex than a standard rental property, due to additional legal requirements and the need to handle multiple tenants under one roof. Many landlords choose to hire HMO management services to ensure their property is compliant, well-maintained, and fully let. However, understanding the costs involved is crucial. This guide breaks down typical HMO management fees, the services they cover, and what to expect as a landlord.

What Is an HMO?

An HMO (House in Multiple Occupation) is a property rented out to three or more tenants who are not part of the same household but share facilities like the kitchen and bathroom. HMOs are subject to stricter regulations, and depending on the size of the property, you may need a licence from the local council. Managing an HMO requires more hands-on work, which is where professional HMO management services come in.

What Are HMO Management Fees?

HMO management fees refer to the costs landlords pay to a property management company to oversee the day-to-day operations of an HMO. These fees typically include services such as tenant management, property maintenance, rent collection, and ensuring legal compliance. The fees vary depending on the size of the property, location, and the services provided.

Typical HMO Management Fees

HMO management fees are usually higher than those for single-let properties due to the additional complexities involved. Here’s what you can expect in terms of cost:

1. Percentage of Rent

  • 10% to 15% of monthly rent: Most HMO property management companies charge a percentage of the gross rental income. For HMOs, this usually ranges from 10% to 15% per month, depending on the number of tenants and the level of management required. Some companies may offer discounted rates for larger properties with more rooms.

2. Setup Fees

  • One-off setup fee: Many HMO management companies charge an initial fee to set up the property for management. This can range from £250 to £500, and it typically covers tasks such as marketing the property, arranging tenant contracts, and conducting inspections to ensure the property meets HMO licensing standards.

3. Tenant Sourcing Fees

  • 1 to 2 weeks' rent: If you need the management company to find new tenants for the property, there may be a tenant sourcing or letting fee. This is usually charged at 1 to 2 weeks' worth of rent per tenant and covers advertising the property, conducting viewings, referencing tenants, and signing tenancy agreements.

4. Licensing and Compliance

  • HMO licensing fee: Local councils require landlords to obtain an HMO licence, which can cost between £500 and £1,500 depending on the location and size of the property. Some management companies include assistance with the licensing process as part of their services, but the licence fee itself is separate and paid to the council.

5. Maintenance Fees

  • Pay-as-you-go or inclusive maintenance: Some management companies charge separately for property maintenance, while others may include it as part of their percentage fee. Typical maintenance costs could include emergency repairs, safety checks, and routine upkeep of communal areas. If not included, landlords may be charged on a pay-as-you-go basis for individual repairs or an additional maintenance package.

What Do HMO Management Fees Cover?

The services included in HMO management fees can vary from one company to another, but here are the most common services offered:

1. Tenant Management

Managing an HMO involves handling multiple tenants, each with separate contracts and needs. A property management company will:

  • Advertise and fill vacant rooms
  • Conduct tenant referencing to ensure they are suitable
  • Prepare and manage tenancy agreements
  • Handle tenant disputes or complaints
  • Oversee tenant check-ins and check-outs

2. Rent Collection

With an HMO, rent is usually collected from multiple tenants, which can be time-consuming for landlords. The management company ensures:

  • Rent collection from each tenant
  • Handling of late payments or rent arrears
  • Providing regular income reports to the landlord

3. Property Maintenance

HMOs often require more regular maintenance, particularly in communal areas. The management company will handle:

  • Routine maintenance and cleaning of shared spaces
  • Organising repairs for any issues that arise
  • Safety checks, such as gas safety certificates, fire alarms, and electrical safety tests
  • Responding to emergencies (e.g., boiler breakdowns, leaks)

4. Legal and Compliance Management

HMOs have strict legal requirements, including fire safety regulations, tenant deposit protection, and local council licensing. A professional management company will:

  • Ensure the property meets all HMO regulations
  • Apply for or renew HMO licences
  • Arrange for necessary compliance checks (e.g., gas safety, PAT testing, fire risk assessments)
  • Keep up-to-date with changes in HMO legislation

Benefits of Using an HMO Management Service

Using a professional management service for your HMO offers several benefits:

  • Time-saving: Managing multiple tenants and ensuring compliance can be time-consuming. A management company takes over these responsibilities, freeing up your time.
  • Expertise: HMO management companies have experience navigating the complexities of licensing, tenant disputes, and maintenance, ensuring the property runs smoothly.
  • Peace of mind: With a professional service, you can rest assured that your property is being managed efficiently and in line with legal requirements, reducing the risk of fines or disputes.

Is HMO Management Worth the Cost?

The higher fees associated with HMO management reflect the additional work involved in managing multiple tenants and ensuring the property complies with regulations. For landlords who don’t have the time or expertise to manage an HMO, the cost of hiring a management company is often worth the convenience, legal protection, and peace of mind it provides.

How Fraser Bond Can Help

At Fraser Bond, we offer expert HMO management services tailored to the specific needs of landlords. From tenant sourcing and rent collection to property maintenance and legal compliance, we handle every aspect of managing your HMO property. Our services ensure that your investment remains profitable while staying fully compliant with all regulations.

Contact Fraser Bond today to learn more about our HMO management fees and services, and let us help you maximise your property’s potential with expert care and professionalism.