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HMOs without licenses are not eligible for a mortgage. Lenders might instead offer you a buy to rent mortgage.

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However, this does give unlicensed HMOs a negative connotation. It suggests that they are illegal or "fly-by-night". These smaller HMOs are often referred to by local authorities, lenders, and owners as multi-lets, "HMOS not Required To Be Licensed", or "nonlicensable MMOs".

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Why invest in HMOs? HMOs are more profitable than regular rental properties. But what are they and how do you finance them? A House of Multiple Occupation is a property in which three or more people share a bathroom or kitchen and they are not related. Each property must have a HMO license from the local authority to ensure they comply with regulatory standards. These homes, also known as house-shares, are popular with young professionals and students. Rent is usually more affordable than small apartments or studios. An HMO is a great investment for landlords and property investors. Multiple bedsits typically yield higher rental yields than a stand-alone buy to let.

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hmo mortgage interest only

hmo mortgage interest only


What is a HMO, exactly? What is a house in multiple occupation? A standard HMO can be run by a landlord with no more than four people. HMOs require different mortgage requirements than buy to let mortgages for entire-property tenancies.

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A traditional property to buy and let would normally accommodate one person or a whole family. Renters would pay a single rent payment, either weekly or monthly. The household would also be responsible for paying the utility bills. These are sometimes referred to as "singlelets".

hmo finance guide

hmo finance guide


HMO licenses issued by local authorities are valid for five consecutive years if approved. HMO licences must be provided for each property. A landlord might have three HMO properties. Each HMO will require a license.

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HMO mortgage lenders are likely to take your rental income into account. This can help to increase your mortgage limit. HMO mortgages could be offered at tracker or variable rates. LTV rates generally start at 80% LTV. More attractive rates can be offered with higher deposits or lower LTV ratios.