Housing in Multiple Occupation

HMO (Housing in Multiple Occupation) properties are those which are let to a number of non-related individuals

Such properties have always existed, particularly in University towns and in busy metropolitan areas. Recently, there has been an increased focus on these types of properties, as investors have sought to generate a greater rental-yield from their property portfolios. It is often the case that a property let as an HMO will generate more income than one which is let to a single family. As greater numbers of investors have moved towards HMO-type set-ups, so many local authorities have responded by increasing regulation for such dwellings. It is important that, as an investor, you understand the responsibilities placed upon you by the relevant local authority, when becoming the landlord of an HMO property. Most local authorities now require HMO properties to be licensed.

As HMO properties will often generate a greater rental-yield, we are regularly contacted by landlords who want to raise additional capital from their existing properties. We have a lot of experience in this area, both with licensed and unlicensed properties. We have an excellent understanding of the licensing requirements and also of which lenders have an appetite for lending on these types of properties.

If you have an existing HMO property or if you are considering the purchase of one, click here or call us to speak with one of our advisers.


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Frequently asked questions

Answers to the most common question we get asked
What is an HMO mortgage in the UK?
An HMO mortgage is a type of mortgage designed for properties that are classified as Houses in Multiple Occupation. These properties are typically rented to multiple tenants, each with their own rental agreements.
Can I get a standard buy-to-let mortgage for an HMO property?
No, standard buy-to-let mortgages are generally not suitable for HMO properties. You typically need a specialized HMO mortgage designed for this type of rental arrangement.
How is rental income assessed for HMO mortgages in the UK?
Lenders assess the potential rental income of the HMO property when determining your eligibility and the amount you can borrow. This assessment is typically more detailed than for standard buy-to-let mortgages and may take into account local rental market conditions.
How do I apply for an HMO mortgage in the UK
To apply for an HMO mortgage in the UK, you'll need to gather necessary documentation, including details about the HMO property, your income, and your rental income projections. You can apply directly to HMO mortgage lenders or work with a mortgage broker.
Can I convert my existing property into an HMO and get an HMO mortgage?
Yes, you can convert an existing property into an HMO and obtain an HMO mortgage. However, you must ensure that the property meets the legal and safety requirements for HMOs, and you may need planning permission.
What is an HMO property in the UK?
An HMO property in the UK is a residence that is rented to three or more unrelated tenants who share common facilities, such as a kitchen or bathroom. These properties require an HMO license from the local authority.
What are the eligibility criteria for HMO mortgages in the UK?
Eligibility criteria for HMO mortgages vary by lender but often include factors like the property's HMO license, the rental income, and the applicant's creditworthiness.
Are HMO mortgage rates higher than standard buy-to-let rates?
HMO mortgage rates are often higher than rates for standard buy-to-let mortgages due to the perceived higher risk associated with HMO properties. Rates can vary depending on the lender and your financial situation.
What are the responsibilities of an HMO landlord in the UK
HMO landlords in the UK have specific legal responsibilities, including ensuring the property meets safety standards, maintaining common areas, and obtaining the necessary HMO license from the local authority.
Are there any government schemes or incentives for HMO landlords in the UK?
In some cases, HMO landlords may be eligible for government schemes related to energy efficiency or rental income support. The availability of such schemes can vary by location and time, so it's essential to stay informed about the latest incentives.
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