I've fallen for a large flat in a coastal town but it's next door to a 20-bed HMO - should I steer well clear?

I'm looking to buy a home in a coastal town. The flat I've been looking at has much more space than I could ever afford elsewhere.But there's an issue. A former care home next door to the flat has been converted into a 20-bed House in Multiple Occupation (HMO).Would I be crazy to go ahead and buy the flat? What factors do I need to take into account with the HMO next door? Will it devalue the flat? And why are so many HMOs being permitted in locations like this?Jane Denton, of This is Money replies: The district council you are looking to buy the property in has already vowed to be stricter on the problems that can stem from HMOs, including noise and parking. But the council still seems to be giving many properties in the area the green light to become HMOs. Approach with caution: Living nextdoor to an HMO comes with risksI did a bit of digging and it seems there were more than 100 local objections to the 20-bed HMO you mention, yet it was waved through by the council.If you can, talk to the owner of the flat you are looking to buy or other neighbours within the block.They will be able to tell you what sort of problems, if any, stem from the HMO next door. Given there were so many objections to the HMO, I suspect there is considerable hostility towards it. Waste collections, parking, noise and other anti-social behaviour could be problematic. And because the HMO is large, you are likely to see a high turnover of people moving in and out throughout the year. If you wanted to sell in the future, having a large HMO next door could negatively affect the value of your property. You will need to weigh up whether getting a larger flat than you could otherwise afford elsewhere would be worth the potential problems involved of living next door to such a large HMO. I asked two experts for their thoughts. Jonathan Stephens, a director at Smart Landlord, said: There are a number of things you should look into before deciding whether the flat is right for you and whether it is likely to be negatively affected by the HMO next door.A 20-bed HMO is a sizeable operation, so it is important to understand how well it is managed, the quality of the accommodation, the likely tenant profile and whether there are proper systems in place to manage noise, refuse, maintenance and parking.Issues with HMOs generally arise because of poor management or high tenant turnover. Noise, pressure on parking, refuse, frequent changes of occupants and inadequate maintenance can all affect neighbouring residents. Jonathan Stephens is a director at Smart LandlordThat said, a well-managed HMO with responsible tenants should have very little impact on neighbouring properties.I would visit the flat as many times as possible before buying, including in the evenings and at weekends. I would not rely on a single 20-minute viewing in the middle of the day. I would also walk around the immediate area and look carefully at how the HMO itself is maintained.Local knowledge is extremely valuable. Speak to neighbours and other people in the area. Nearby estate and letting agents can also be a good source of information, particularly those not involved in either the sale of the flat or the management of the HMO. They may be able to indicate how the HMO is perceived locally and whether it has affected the surrounding area.As for why HMOs are appearing in coastal towns, it is often less about the coastal location itself and more about the commercial viability of operating an HMO where property values are relatively low. Landlords may be able to acquire larger buildings at lower prices and improve their yields through economies of scale.Ultimately, as a prospective buyer you should build as complete a picture as possible of both the HMO and the immediate area. An HMO next door does not automatically devalue a property, but if it is poorly managed or has created a negative perception of the street, it could affect saleability and value. Having the wider picture should put you in a much stronger position to make an informed decision. Michael Zucker, a chartered surveyor at north London estate agency Jeremy Leaf & Co, said: With the growth of the railway network in Victorian times and the development of seaside resorts, large luxury hotels and smaller guest houses were built to accommodate the influx of tourists. However, with the advent of cheap foreign travel in the 1970s, most British seaside resorts lost a large part of their tourist industry and the hotels and guest houses were no longer viable. The larger hotels were often converted to residential care homes and smaller guest houses became attractive to buy-to-let investors able to purchase them at low prices before converting them to HMOs to maximise their returns.Many local authorities encouraged the growth of HMOs in order to provide a range of housing options for various people, including those on lower incomes, NHS or hospitality workers and students.Many seaside resorts now have reduced amounts of industry or depressed economies making it cheaper for investors to buy large properties suitable for use as HMOs. The quality of these HMO properties varies enormously and can affect the value of nearby privately-owned flats and houses.If the HMO is let to professional tenants and maintained to a high standard, its negative effect may be minimal. However, once a property has been classified as an HMO it is likely to remain one for the foreseeable future. A future change in ownership of the property could result in maintenance standards falling and changes in the calibre of tenants. There is no guarantee that any neighbouring property of whatever type will not change in character in the future, either for better or for worse, but realistically the existence of an adjacent HMO will have a negative effect on marketability and value.Before purchasing the flat it would be a good idea to visit the area at different times of day to see if disruptive anti-social activity is apparent. An external inspection of the HMO will also indicate the standard of maintenance.It is very difficult to estimate the percentage of negative effect on a nearby flat as so many factors are involved. However, if the HMO allows you to purchase a property of better quality and size than you would otherwise be able to afford you may wish to take a view on it and to balance out the pros and cons. 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