HMOs are more difficult to manage than traditional buy-to-let models. Tenants can sometimes get irritated when they are sharing facilities within an HMO. You may also be a landlord and act as a mediator between tenants who do not see eye-to-eye.
There are also void period to be aware of. Traditional buy to let has fewer void period, while HMOs have longer void periods. HMOs can also have higher maintenance fees than traditional buy to rent models. This is due to the shared communal areas, such as bathrooms and kitchens, or living rooms (where applicable).
A traditional buy to rent model would typically house a household or even a group of people who have made the decision to live together. Disputes are resolved in the home without having to go to the landlord. This is why landlords usually have an HMO type. It could be student buy to let, or an HMO for professionals only.
A House in Multiple Occupation or HMO is a property which is let to more tenants than one family. It is where tenants share rooms and occupy their private bedrooms. the lounge, kitchen and bathroom. An HMO is when people refer to a flat share or a house share.
HMO mortgage lenders will typically take rental income into consideration. This can dramatically increase the mortgage amount. HMO mortgages can offer variable and tracker rates. LTV rates are usually set at 80% LTV. Rates that offer attractive rates come with higher deposits and lower LTVs.
It can be difficult to find the right HMO financing for you. Each lender has different criteria. Our experienced buy-to-let team can help you find the best HMO mortgage or provide general advice on property finance.
HMOs do not always generate the same rental income as buy-to-let properties. Remember that utilities bills are often paid by landlords. With the above example, even with an annual PS2k-3k utility bill, there's still a lot of rental profit.