hmo mortgages leeds building society
Your HMO may not require a license. This could make it unsuitable for an HMO mortgage. Therefore, lenders may only offer you a mortgage to buy and let.
HMOs can be considered higher-risk than standard BTLs. HMO tenants move around more quickly than standard BTL tenants, and there is a greater risk of voids. They can be less committed as tenants to their property as their home. This could mean that they are less responsible for its care and maintenance. Additionally, it can be difficult to identify any issues or damage with a specific tenant.
Students and young professionals often rent HMOs. Renting a room in a property is less expensive than renting the entire thing. However, the average rent for all rooms is higher than what a family could pay. HMOs offer landlords a better opportunity to earn a higher rental yield.
Your HMO may not require a license. This could make it unsuitable for an HMO mortgage. Therefore, lenders may only offer you a mortgage to buy and let.
HMO properties are sometimes advertised as having irresistible gross yields of 100%+. Who wouldn't love a piece? The HMO sector has a high yield, but you need to be aware of your costs. This includes council tax, insurance costs, utility bills, management fees, rent arrears and any voids. In reality, an HMO can yield an ROI of 8-10% each year, compared to 4-5% for a single-tenancy purchase-to�let.
HMO mortgage lenders have additional requirements for the property. Some mortgage lenders have specific requirements about the property. For example, they may require that only one kitchen be available to tenants or that tenants share common seating. Others limit the number and height of bedrooms and storeys. Find a lender that will allow you to renovate your property before you lease it. A mortgage broker is able to assist you in navigating all the restrictions and conditions necessary to find a lender willing to lend.
HMOs are rented by young professionals and students who are unable to rent whole properties or aren't yet settled enough to live with a partner. It is more affordable to rent a single room than an entire house, but the rents for the whole property are usually higher than the rents that could be charged to a single family. The HMO allows landlords to make a greater rental income.
Before you decide to invest, make sure to speak with your local HMO licensing agent. It is important to be familiar with the local definitions and licensing requirements. This may include minimum sizes for living spaces and kitchens, number of bathrooms or showers, fire apparatus, and other such things.