Traditional buy-to-let models would usually house a family, or people who have decided to live together. Disputes can usually be resolved within the household, without the landlord being involved. Therefore, landlords will usually have an HMO type such as student buy-to-let or one that is only for working professionals.
HMOs are a popular choice for individual tenants because they are usually affordable and fully furnished with bills. This is particularly true for overseas workers, students and contractors who are working visas. HMOs offer the convenience of moving in quickly and at little expense.
HMO mortgage rates tend be higher than buy to let mortgages. HMO mortgage rates tend to be higher than standard buy-to-let mortgage products due to the lower competition among lenders. HMO-friendly lenders will typically charge slightly higher mortgage rates and fees than those who are not willing to lend on the HMO. An HMO should have sufficient income to cover the mortgage, utility bills, and maintenance.
Multi lets work in the same way as HMOs, except that they are rented to non-related tenants and they share the common areas. The main difference is that multi lets are not licensed.
Young buyers are still unable to afford a home, so the demand for affordable rented accommodation is high. You can check the local listings sites (Gumtree and Zoopla) to see how strong the demand is from prospective tenants.
HMO properties could be for sale, offering attractive "100%+ gross yields". You wouldn't mind a piece of that! However, HMOs can have very low gross yields. These costs include council tax, insurance, utility bills and management costs. Rent arrears are also included. An HMO might yield a return of 8-10% per year, while a single-tenancy buy to let would earn 4-5%.
A HMO can make you a higher profit than renting to a family. You can charge for each room separately and charge more overall. You will require a specialist mortgage to accomplish this.