HMO properties are no longer just for the experienced portfolio landlord. As lenders broaden their criteria, HMOs are becoming a more accessible property investment option, offering many benefits to interested investors.
What is an HMO?
A House in Multiple Occupancy (HMO) has three or more unrelated tenants who share amenities such as kitchens and bathrooms (commonly known as a ‘house share’). It is a popular option for student housing and young professionals wanting to live near work or commuter connections.
Why should you have an HMO in your portfolio?
HMOs are often seen as a step up from standard buy to let investments, as they are often considered more challenging to manage and have a higher financial risk than traditional vanilla buy to let properties. But, having an HMO property in your buy to let portfolio also comes with a number of benefits, and many landlords we work with have built highly successful portfolios around them.
Higher Yields
HMOs consistently outperform vanilla buy to lets on yield. In 2025, the average HMO yield is currently 9.58%, compared to 6.79% for standard properties. That extra income can help you scale faster and cover maintenance costs more comfortably.
Rental Voids
One of the main concerns with HMOs is tenant turnover. This is typically higher in HMOs, especially with students and younger renters. But unlike single lets, a vacant room doesn’t mean zero income. Rent from other tenants continues, softening the impact of voids or arrears, making them less financially significant and more manageable.
Location
Location is vital when it comes to HMO success. Demand for shared housing is strong in cities and large towns, especially among students and young professionals. Properties near universities or with good transport links tend to let quickly and reliably. Student lets often rebook months in advance.
If you’re renting to young professionals, then transport links are a must, or town/city centre locations to make commuting and access to local amenities easy.
HMO licencing
HMO licencing can appear complicated as the rules vary depending on the local authority. For some, properties with four or fewer tenants do not need a licence, but in others, they will. We recommend always checking with your local authority to see whether the property you wish to purchase will require a licence.
If the property you’re purchasing does require an HMO licence, these can sometimes take a while to come through. When you’re applying for your HMO mortgage, most lenders will only need to see proof that you’ve applied for the licence. However, if you are remortgaging your HMO, the lender will want to see a copy of the licence.
HMO mortgages
HMO mortgages are becoming increasingly accessible, with more lenders regularly adding products to the market. While HMO rates are generally higher than those for vanilla buy to lets, increased market competition has decreased the difference, making them more affordable for landlords. Of course, given the current climate, rates are now rising across all mortgage products, so it’s worth speaking to a broker to see what options may be available to you. Competition between lenders on HMO products has also seen many specialist lenders introduce other incentives, such as no product fees, cashback, and free valuations.
Currently, interest rates for 75% LTV HMO mortgages start from 4.59% (two-year discounted variable) and 2.34% (two-year fixed) for individuals and limited companies. For five-year products, rates start from 6.24% (discounted variable) and 3.89% (fixed)*.
*Rates as of October 2025
HMO Mortgage Criteria
HMOs have long only been an option for the more experienced buy to let landlord, but things are changing. While most lenders do still require anything from one to three years buy to let landlord experience, we have access to some that only require six months or even no previous buy to let experience at all!
Just as with regular buy to let properties, most lenders are more concerned with what the security is for the property and whether the rental income will be enough to meet the mortgage repayments plus more to cope with void periods and essential maintenance.
Speak to an expert mortgage broker
If you’d like to discuss which HMO buy to let mortgages rates may be available to you, please do not hesitate to contact us.
Call us on 0345 345 6788, or submit an enquiry here.
