A House in Multiple Occupation (HMO), is a property that is let out to more then three tenants. These tenants have private bedrooms, but they share other rooms such as the kitchen, bathroom, and lounge. The lounge, kitchen, and bathroom. If people refer to a HMO by using the terms 'flat share' and 'houseshare' they mean an HMO.
Naturally, higher potential rewards are associated with higher risk. A traditional buy to let will have a higher turnover, but you're also more likely than a traditional buy to let to have tenants that leave. Each additional tenant is an unknown variable (e.g. What will their rent be? Do they cause any damage? Are they likely to cause problems? Also, you will need a specialist mortgage.
HMOs can be complex and buy to let lenders may only lend money to experienced landlords. While criteria may vary from lender to lender and are subject to change, typically a minimum of two years experience as a landlord will suffice. While some lenders will consider you a first-time landlord, most will require that you use a property manager to manage the property. Our buy-to-let team will help you determine whether you qualify for an HMO loan.
A traditional buy-to-let property could accommodate one person, or a large family. The household would have to pay one rental payment on a weekly and monthly basis. The utility bills are also paid by the household. These can be called'singlelets'.
HMO licences may be granted by different councils. If you are applying for a HMO licence, you should be fully informed about all the conditions. HMO licences must be obtained from the local authority. Otherwise, a fine of up PS20,000 will be imposed on anyone renting a licensable HMO.
HMOs may not generate three times as much rental income as a buy-to-let standard. You should also remember that landlords usually pay utility bills. However, even though the utility bill is approximately PS2k-3k annually, there is still a significant rental profit.
What is an HMO-mortgage? HMO mortgages can be used by landlords to rent their property to more tenants than one household. These specialist buy to let mortgages offer some key distinctions.