A single agreement can be used by landlords to manage HMO properties. Or, each tenant can have their own contract.
HMO lenders will take into account the potential knock-on effects of higher mortgage risks on your ability pay the mortgage. The interest rates are currently at about 3%, compared with 1.7-1.8% for single-tenancy BTL.
Lenders can accept evidence of a HMO license application in lieu the actual licence. This can take more time and it is not always practical. Accordingly, you could be deemed "fit and proper" to run an HMO under the condition of having the license. However, it is best to have your licence available so that the underwriting process can be expedited at the application stage.
What tenants can I target through my HMO? - Low-cost / affordable Housing / Housing Benefit Tenants: Some landlords let their entire properties to local authorities to use as low cost housing. In return, they get an income stream and a discount. - Professionals: A growing number of working professionals rent their properties into their late 20s to 30s. They prefer higher-spec properties (often having more bathrooms), but are more stable and live a quieter life. -
HMO properties generate higher yields but are more difficult to setup. HMO licences might be required depending on what the HMO is.
HMO lenders may be concerned about the knock-on effects on your ability of to pay the mortgage. These higher risks are reflected in the current interest rates. They currently hover around 3%.
Houses in Multiple Occupation can yield more than regular buy to lets investments. HMO mortgages have also been more common among landlords. But, does it really make sense to apply for an HMO loan? Can a traditional purchase-to-let mortgage suffice?