HMOs: Why should you invest? - There are fewer "impactful gaps" between tenants: The gap between tenants for a single occupancy property can be as low as a month. This allows for repairs, redecorating, and viewings without rent coming in. An HMO allows you to reduce your losses by renting from the remaining tenants. You may also be able to deduct more costs than with a standard BTL.
HMO licenses can be subject to additional conditions at individual councils. You should however be aware of all requirements when applying. HMO licenses are not negotiable if required to be granted by the local authority. The penalty for renting an HMO licensed without a licence can lead to a fine up of PS20,000.
Before you invest, get in touch with the HMO licensing officers at your local authority. Before you make any investment, ensure that you know the requirements of your area. These could include minimum dimensions for kitchen and living space, kitchen equipment, bathroom facilities, number of toilets, showers, firewood, and others.
HMOs can be rented by students or young professionals who cannot afford to rent the entire property. They may also not be settled enough to move in together. A tenant can rent one room for less than an entire property. However, the total rent for all of the rooms is typically higher than what could be charged to a single household. HMOs can bring in a higher rental income for landlords.
HMO mortgages tend to be restricted to experienced landlords. For example, some lenders won't consider applications from someone who has been a landlord for more than 2 years and/or has experience in HMO-letting. Lenders might have additional requirements. It is possible to apply for an HMO mortgage but it may be difficult to obtain approval if you are not a landlord.
A House in Multiple Occupation is a property that's let to more than three tenants. The tenants share some rooms but have their own bedrooms. The kitchen, bathroom, and lounge. Flat share or house share is an HMO.
HMOs will not all generate triple the rental income of a regular buy to let. It is also important to remember that utilities bills are typically paid out by landlords. The above example shows that even with a PS2k-3k monthly utility bill, rental profits are still substantial.