Before You Buy a Let: The Questions to Ask on a Buy-to-Let or HMO

Buying a let is a business decision, and a good one is made on evidence. A headline yield tells you where to start asking questions, not where to stop.

This is a list of questions to put to the seller, the agent and the council before you commit, in six sections. It is a list of questions to ask, not financial, tax, legal or surveying advice, and rules change, so check the current position with the council, your solicitor and your accountant.

Section 1: The property and its status

Start with what the property is, in law, today.

• Freehold or leasehold? If leasehold, ask the lease length, ground rent and service charge.
• Is it sold with tenants in place, or with vacant possession? Tenants stay when the property sells.
• What is the lawful use: a single let, a small HMO or a larger HMO? Ask to see the planning consent or certificate of lawfulness.
• Does an Article 4 direction apply? Some councils use it to remove permitted development rights for changing a house into a small HMO.
• Is there an HMO licence? Ask the council whether it transfers or whether a new application is needed.

Section 2: The numbers

A headline yield is where the questions start, not where they end.

• Ask for the rent roll, room by room, with the tenancy agreements behind it.
• Are bills included in the rent? Ask for the actual bills for the last year.
• Ask about void periods: how often rooms or units have stood empty.
• Gross yield is annual rent divided by the price. Net yield takes off the running costs, so ask for the real costs: insurance, licence, repairs, management, council tax.
• Ask for recent sold evidence in the area, and check whether asking yields are actually being achieved.

Section 3: Licensing and rules

Rules differ by council and change over time. Ask, and get it in writing.

• Mandatory HMO licensing normally applies where five or more people from two or more households share facilities. Councils can also have additional or selective licensing schemes.
• Ask about minimum room sizes and the amenity standards the council applies.
• Fire safety: alarms, fire doors and, where required, emergency lighting.
• Gas safety record every year, and an electrical safety report at least every five years.
• The EPC rating and whether it meets the current minimum standard for letting.
• Deposit protection, prescribed information and right to rent checks for current tenancies.

Section 4: Condition

Buy what is there, not what the brochure says.

• Ask the age of the roof, boiler and wiring.
• Look for visible damp, mould, cracks or patched repairs, and ask about each.
• Ask for the maintenance history and the invoices for recent works.
• Ask whether any work had planning permission and building regulations sign-off.
• Instruct a RICS surveyor suited to the property type before you exchange.

Section 5: Tenants and management

The tenancy is part of what you are buying.

• Ask for the tenancy type, start dates and rent for each tenant.
• Who collects the rent, and are there any arrears?
• Is there a managing agent, and what do they charge?
• Ask what referencing was done for the current tenants.
• Ask for the inventory and the deposit protection details.

Section 6: Finance and insurance

Check these before you are committed, not after.

• Ask your lender whether it accepts this property type, such as an HMO or multi-unit building.
• Check how the lender will value it, and what the valuation might mean for your loan.
• Get a landlord insurance quote for this property before you exchange.
• Ask your accountant about stamp duty on an additional property and how the income is taxed.
• Work out your cash needs: deposit, costs, works and a buffer for voids.

Get the free checklist, Before You Buy a Let

The full list, with a tick-off checklist for each section and a PDF, is free at adamclegg.co.uk/landlord-checklist.

If you are buying your own home, see the Buyer's Viewing Checklist. If you are selling, read the Seller's Checklist.

For local sold prices, see house prices in the Stroud area, and for a monthly local update, sign up to the Market Pulse. If you own lets and are thinking about selling, you can ask for a valuation.

This is general information, not financial, tax, legal or surveying advice.