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HMO house of multiple occupation finance

A House of Multiple Occupancy (HMO) is a specialist type of Buy to Let Property. A House in Multiple Occupation (HMO) can be more lucrative when compared to traditional buy to let properties. And with the right mortgage ensuring the profits made from rental income are maximised. But only a few specialised lenders will fund a multi-let property. We work with a range of specialist lenders who provide mortgages specifically for HMOs.

What is a (HMO)? Is a single property subdivided and individually rented out to different people who share some common areas such as bathrooms and kitchens, such as shared student accommodation. Landlords charge per room, per flat or per section of the property resulting in an increased rental income. It’s common for HMO landlords to pay the utility bills for the property.

How much will House of Multiple Occupancy (HMO) finance cost you?

HMOs tend to be seen as higher-risk than standard BTLs. Because HMO tenants are unrelated they tend to move on more quickly, giving a higher chance of voids or unpaid rents. They’re also less committed to the property as their home, and take less responsibility for its care and upkeep. Any problems or damage are harder to identify with a particular tenant.

HMO lenders will be considering the knock-on effects of these higher risks on your ability to pay the mortgage, and this is reflected in the interest rates. Investors looking to take out a HMO mortgage under the name of a limited company should refer to our Buy to Let Limited Company and Tax Efficient Commercial Property Purchase pages. 

Will I need a House of Multiple Occupancy licence?

Although HMO properties tend to generate higher yields, they’re more complex in setting up. Depending on the nature of the HMO, landlords may require an HMO licence. Local councils provide HMO licences and are valid for five years if approved. HMO licences are provided for each property and not for each landlord. Not every HMO will require a licence, as it depends on the size and nature of the House of Multiple Occupancy property. In addition, each local council will have their own terms and conditions for HMO licensing. Larger setups often require licences whereas smaller setups may be exempt.

For more specific help and to talk through you options, call our team of expert advisers today

Please note this service is not regulated by the FCA