The difference between a bedsit and an HMO - Total Landlord Insurance

March 31, 2022
Total Landlord Insurance
The difference between a bedsit and an HMO - Total Landlord Insurance

For many new landlords, getting to grips with the industry can be quite a challenge, especially when it comes to understanding legislation, private rented sector terminology and the differences between property types.

Two of the most common terms that a landlord is likely to come across are ‘bedsits’ and ‘houses in multiple occupancy (HMOs)’. It is important that landlords understand the differences between the two as the legal and landlord insurance obligations vary significantly, depending on whether you’re renting out a bedsit or an HMO.

What is a bedsit?

A bedsit is defined as a single unit within a shared property, in which the tenant occupies the unit but shares other facilities in the home, such as the bathroom and kitchen, with other people living in the building.

The term bedsit refers specifically to the room or unit which the tenant occupies and pays rent for, and not the actual building itself. While bedsits and HMOs are closely related, they are not the same thing. An HMO is a residential building containing separate bedsits or rooms which are occupied by different renters. An HMO property is occupied by at least three people who are not from the same household but share facilities.

The key difference between an HMO and a bedsit, is that the term ‘HMO’ refers to the whole building, whereas ‘bedsit’ refers to a single unit within a building. The two terms refer specifically to their respective elements of a rental property and shouldn’t be used interchangeably. As ‘HMO’ and ‘bedsit’ are distinct from one another, there are also specific regulations that apply uniquely to each.

The statutory requirements for a bedsit may vary depending on the local authority – for example, The Royal Borough of Chelsea and Kensington rules that the minimum floor area for a bedsit with a shared kitchen should be no less than 9.5m squared if occupied by one person and no less than 12m squared if occupied by two people.

However, Croydon Council rules that a bedsit with a shared kitchen should be no smaller than 10m squared for one person, and 15m squared for two people.

Since the rules can vary, it is vital to be informed on local legislation to make sure that you are compliant.

What is an HMO Property?

An HMO can refer to any building consisting of multiple independent flats where the individual households do not have to share facilities with each other, as long as there is at least one shared element, such as a toilet, in a shared area within the building.

In HMOs, each household living within the property pays the landlord a rental bill each month for their individual bedsit. The multiple occupancy aspect of an HMO is based on there being more than one household, rather than more than one person, living in the property. Since HMOs consist of separate ‘households’, you need to make sure that your insurance policy is set up accordingly.

Certain types of large HMO require an HMO licence in order to operate legally. An HMO is considered to be large if it is rented to five or more people who form more than one household, or if the property is at least three storeys high.

However, some local authorities may have more stringent rules for even smaller HMOs, so it is always worth checking whether your HMO requires a licence.

A separate HMO licence is required for each property, and landlords who fail to acquire one – or fail to renew it before it expires after five years – could receive an unlimited fine.

The rules surrounding HMOs apply only to properties which meet the classification, and not necessarily to all properties which contain bedsits. For example, you can rent out two bedsits to two separate rent-paying lodgers before it is considered an HMO. However, once you rent out bedsits to three or more separate paying lodgers, the property becomes an HMO, and all the associated rules and regulations will be applicable to your property.

Learn more about what our buy to let and HMO insurance policies cover.

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