House in Multiple Occupancy (HMO) Mortgages

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A HMO (House in Multiple Occupation) is a property, usually a large single house that is subdivided, that is let to multiple different households where at least three people occupy the property sharing an amenity – for example, a bathroom, toilet, or cooking facilities. The popularity of Houses in Multiple Occupation (HMO) properties has increased over recent years and with it the availability of specialist HMO mortgages.
The HMO market is a specialist one and it’s important to understand the rules and regulations before taking the plunge.
With greater potential for higher yields and higher monthly profits than traditional Buy to Lets, HMOs have become an appealing choice for many landlords. However, there is a greater management level required to maintain a good quality HMO and the rent will normally be all inclusive of associated bills, water, gas, council tax etc. They are designed for landlords who in most instances already have experience owning, renting and / or managing at least one single unit buy to let property over a few years.
How will my HMO property be valued?

  • Most HMO mortgage lenders will value HMOs of 6 or less rooms on a bricks and mortar valuation (a building valuation)

  • If your HMO is a fully operating HMO in an article 4 area, OR a large HMO with 7 or more tenants with “Sui Generis” planning permission, then we are able to obtain commercial funding based on the “going concern” of the HMO rather than just the building value enabling you to get an HMO mortgage against the income in addition to the building value.

Not all buy to let lenders will provide HMO mortgages, although in recent years the landscape of lenders has evolved and more lenders will consider smaller HMO’s depending on the type of tenancy in place. Working with a range of specialist lenders giving you the widest selection of HMO specific products to choose from, our property investment finance specialists provide expert advise and can help source the most suitable finance for your HMO requirement. Even if you are a first time landlord looking to jump straight into a HMO property investment, we have lenders that will consider.