A traditional buy to rent property typically can accommodate one person or the entire family. A household would make a single rental payment each week or month. The household would also have to pay utility bills. These are commonly referred as'singlelets'.
Lenders might take into consideration the potential rental income when assessing your HMO's worth. This is especially important if the property has been converted and you want to withdraw some equity.
HMO mortgage rates can be more expensive than traditional buy-to-let mortgage products. HMO mortgages are more competitive because of the smaller number of lenders. HMO loan lenders will have higher rates and fees. However, HMO income should be enough to cover mortgage, utility bills, maintenance and other expenses.
Landlords have two options for managing their HMO property: a single, joint and severally liable agreement or an individual contract per tenant.
HMOs: Why would you want to invest in them? - Higher rental income. You might expect to get roughly double the rent. You can rent a four-bedroom house to one family for PS800 a month. Four tenants would pay PS400 a monthly each. Rent inclusive of bills may be a way to attract tenants. This will increase your costs.
Before you make an investment, talk to your local HMO licensing office. Make sure you are familiar with your local licensing requirements and definitions. They may include minimum living and kitchen space sizes, kitchen facilities, toilet numbers, showers or baths, fire-pit equipment, etc.
HMOs: What are the benefits? - Less "impactful voids": A gap between tenants at a single occupancy house can be as little as one month. This allows you to make repairs, redecorate, and view the property, without any rent coming in. The rent received from other tenants can be reduced with an HMO. Your costs could be more tax-deductible than a standard BTL.