Landlord Insurance Explained - Do I Need HMO Insurance?

Landlord Insurance Explained - Do I Need HMO Insurance?

As if Insurance is not complicated enough when you combine that with the world of local authority licensing, HMO Insurance can feel like a cocktail of abbreviations and small print!

One of the most common questions we’re asked by our property-owning clients is “Do I need specialist HMO Insurance?”  

In fact, before you can answer that, you really need to understand whether the property itself is classed as an HMO and requires local authority licencing.


What is a House in Multiple Occupation?

A House in Multiple Occupation, or HMO as it is more commonly known, is a property which is rented out or let to at least 3 people who are not from one “family” or “house”, but share facilities or common areas such as a bathroom or kitchen.

In more general terms it can also be described as a “house share”.

There is no restriction on tenant occupation, and typically HMO’s can include:

  • Multiple Rooms let to professionals
  • Student Lets
  • Non-UK residents or Asylum Seekers
  • DSS Tenants receiving benefits

Do I need an HMO licence?

If the property is deemed as an HMO, it will need to be licenced by the local authority.

In Scotland, a let property is defined as an HMO if it is shared by 3 or more adult tenants who are unrelated.

The rules in England and Wales are slightly different, whereby property is usually defined as an HMO if it is:

  • Is at least 3 storeys high
  • Rented to 5 or more people who form more than 1 household

However, local councils can still request an HMO licence for smaller properties and those rented to less people if they see fit.  

As such, we recommend that you check with your local authority if you let your property to more than 3 unrelated adult tenants.

OK, So I know it’s an HMO! What about Insurance?

Hopefully, you now know whether your property is defined as an HMO.  

If the answer is “Yes”, then absolutely you should be looking at HMO Insurance.

Mainstream Landlord Insurance policies will generally not extend to cover properties with multiple tenants or shared facilities, and they may impose onerous or restrictive policy conditions.

Specialist policies exist which are exclusively designed for HMO risks underwritten by Insurers who really understand the multi-let market and the challenges which a Landlord will encounter.


How Much Is HMO Insurance & How Do Insurers Calculate Property Insurance Premiums?

Property Insurance rating is becoming more complicated with the advent of enhanced technology to interpret historic claims performance and in turn, predict the likelihood and frequency of future claims.  

However, the fundamentals of the calculation remain the same:

  • The area in which the property is situated (Postal Code)
  • Age and type of property construction
  • The Re-building Sum Insured
  • The nature of the tenancy and occupation of the tenants
  • Cover required (Buildings Only, Property Owners Liability, Landlords Contents etc.)
  • Previous claims history
  • Risk Protection and Security

We would always recommend that you speak to a specialist Property Insurance Advisor such as Insync Insurance who understand the complexities of HMO and have access to bespoke HMO Landlord Insurance policies which can be tailored to your specific requirements.

FREE Property Insurance Review

Insync provides a FREE Property Insurance review service, where you will speak to an Insurance expert who will take the time to understand your individual requirements and Compare HMO Landlord Insurance from up to 10 insurers in minutes.  

You can book a slot that suits YOUR diary via our website, or call one of our insurance gurus on 0330 1240730, we would love to hear from you!