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Buy to let mortgages for HMOs

All you need to know about HMOs

Getting started with HMOs

Houses of Multiple Occupation (HMOs) are an incredibly popular investment choice amongst landlords and property investors. For many, these property types are a great way to diversify portfolios into the more complex buy to let space and boost rental profits.

Here, you’ll find all you need to know about getting started with HMO property investments, the latest HMO legislation news, essential blogs, and our guide to financing HMOs to help even the most experienced property investors.

Frequently asked questions about HMO mortgages…

What is an HMO property? And what does HMO stand for?

HMO stands for House of Multiple Occupation. An HMO is a property that houses three or more unrelated tenants who share amenities such as a kitchen and bathroom. HMO property typically generates higher yields than standard buy to let, which can be a great way to increase your rental income.


Do I need an HMO licence?

Potentially, yes. The licence you need will depend on the property and its local authority. There are two different licenses you may need for your HMO property:

1 - A mandatory licence is needed for any property with five or more unrelated tenants, also known as a ‘large HMO’.
2 - An additional licence covers properties occupied by three or more people.

You will need a separate licence for each HMO you own. It’s important to note that if you rent out an unlicensed HMO where you need one in place, you could face an unlimited fine.

For more information on HMO licensing, visit our blog here.  


How many people can live in an HMO?

Your HMO licence will tell you how many units/bedrooms you are allowed in one property and the number of tenants. This is typically limited to one tenant per room. Most BTL lenders only accept HMO properties with a maximum of six bedrooms/units, but some specialist lenders may accept more. Speak to one of our mortgage makers to explore what rates are available to you.


Is a student house an HMO?

Student lets often fall into the category of HMOs, as most students will live in groups of four to six throughout their time at university to keep rental costs low. However, a property let to students isn’t always an HMO, and HMOs cannot always be let to students. Other tenants who may look for HMO properties include young and working professionals, as well as singles.


Can I invest in an HMO as a first-time landlord?

Due to their ‘sharing nature’, lenders view HMOs as a complex investment property type. They generally like to see landlords have at least one year’s experience in the ‘vanilla’ buy to let market on your mortgage application.

A handful of lenders will accept applications from first-time landlords on HMO properties. However, mortgage interest rates are usually more expensive, and lenders may have strict criteria in place.


What council tax do I pay on an HMO?

New legislation introduced in December 2023 changed how landlords and tenants pay council tax on HMO properties. Council tax is now only liable on the property as a whole as opposed to individual rooms/units.

For more information on who is responsible for paying HMO council tax, please read our full article relating to the legislative change here, with a response from Peter Littlewood from iHowz Landlord Association.


What mortgage rates are available on HMOs?

Mortgage rates on HMOs are similar to standard buy to let rates but are usually slightly more expensive. This is because lenders view them as a complex property type.

Use our buy to let calculator to explore the current mortgage rates you could access.


Are HMOs easy to finance?

As mentioned above, HMO properties are an increasingly common investment type despite being viewed as more complex by mortgage lenders. They can be reasonably straightforward to finance with the proper support and advice from an experienced mortgage broker (like us!).

Working with one of our expert brokers means you’re supported throughout your mortgage application process. We can answer any questions you may have and find the most cost-effective mortgage option available to you.

To discuss your plans with one of our experts, call us on 0345 345 6788 or submit an enquiry here.

Landlord FAQs -
Financing HMOs

In our downloadable guide, we answer frequently asked questions that every landlord needs to know when it comes to purchasing an HMO for your buy to let property portfolio. Get your copy here. 

Landlord FAQs - Financing HMOs

Talk to an expert

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More about HMOs

What is an HMO & How Do You Finance One?

Houses in Multiple Occupation (HMO) are usually considered more profitable than standard rental properties, but what exactly are they, and how easily can you finance them?

Find out more

New HMO Legislation: An Essential Update for Landlords

Early December saw a new key piece of legislation introduced to change how Council Tax is paid on HMOs. Below, we examine what the legislation means for landlords and feature industry comments from iHowz’s Peter Littlewood.

Find out more

What is HMO Licencing?

HMO licencing and planning can be complicated, especially if you are unfamiliar with the correct processes. We discuss the basics of what your property needs to be classified as an HMO and how to obtain the correct licencing.

Find out more

Financing Houses in Multiple Occupation - FAQs

Why purchase an HMO for your property portfolio? We answer this and lots of other FAQ’s every landlord needs to know in our downloadable guide.

Find out more
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