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.
It is crucial to do the numbers crunching in order to make an HMO profitable. Our HMO mortgage experts can help you maximize your rental income through a thorough analysis of your proposal. A great deal is key to making your HMO more profitable. Many lenders offer preferential rates through mortgage brokers.
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.
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.
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.
How much does it cost for an HMO licence to be obtained? Costs for obtaining an HMO license vary by area. Some councils will charge for the number of bedrooms, while others will charge a fixed fee. These fees can vary from a couple hundred pounds to over a hundred. Lenders know the time required to issue a licence. Therefore, they may accept proof when underwriting a mortgage. Being prepared ahead of time will help avoid any delays.
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.