HMO mortgages tend to be restricted to experienced landlords. For example, some lenders won't consider applications from someone who has been a landlord for more than 2 years and/or has experience in HMO-letting. Lenders might have additional requirements. It is possible to apply for an HMO mortgage but it may be difficult to obtain approval if you are not a landlord.
Are HMO mortgages different? - HMO mortgage rates tend to be higher than standard buy to let mortgage products. This is because the HMO mortgage market is less competitive in terms of the number of lenders. Lenders that are prepared to lend on an HMO will charge slightly higher fees and rates for a mortgage.
HMOs: Why should you invest? - There are fewer "impactful gaps" between tenants: The gap between tenants for a single occupancy property can be as low as a month. This allows for repairs, redecorating, and viewings without rent coming in. An HMO allows you to reduce your losses by renting from the remaining tenants. You may also be able to deduct more costs than with a standard BTL.
Before you invest, get in touch with the HMO licensing officers at your local authority. Before you make any investment, ensure that you know the requirements of your area. These could include minimum dimensions for kitchen and living space, kitchen equipment, bathroom facilities, number of toilets, showers, firewood, and others.
A House in Multiple Occupation is a property that's let to more than three tenants. The tenants share some rooms but have their own bedrooms. The kitchen, bathroom, and lounge. Flat share or house share is an HMO.
HMO licenses can be subject to additional conditions at individual councils. You should however be aware of all requirements when applying. HMO licenses are not negotiable if required to be granted by the local authority. The penalty for renting an HMO licensed without a licence can lead to a fine up of PS20,000.
Many HMOs come fully furnished. This can also be a cost. Traditional properties that are available for rent are usually unfurnished.