What is an HMO?
HMO stands for House in Multiple Occupation which means a property rented out by at least 3 people who are not from 1 “household” (e.g. a family) but share facilities like the bathroom and kitchen. It is often referred to as a “house share”.
HMOs are a popular choice for both tenants and landlords and are usually considered more profitable to landlords than a standard rental property. For individuals and households the rent is often more affordable.
Getting an HMO Licence
In order to operate a property as an HMO you might require a licence. Licences are issued by the local council in which the property is situated and are valid for five years. A separate licence is required for each property you run.
Licensed HMO
At JMS Buy-To-Let Business, we can source a suitable lender for a licensed HMO but worth bearing in mind that each lender has its own preferences based, for example, on the number of bedrooms, type of tenant, how the property is valued, etc.
Non-licensed HMOs – also known as multi-lets
Non-licensed HMOs are often referred to as ‘multi-lets’ because the terms ‘non-licensed’ or ‘unlicensed’ carry negative connotations which suggest that the landlord is avoiding getting a licence even though one is not actually required.
Most of our lenders that provide finance for licensed HMOs will also finance multi-lets but will value the property as a single dwelling only as it does not benefit from enhanced planning or an HMO licence.
HMO Mortgage Availability & Rates
Our team of expert mortgage advisors provide current information on HMO mortgage availability and rates in the market.
Qualification for an HMO Mortgage
If you wish to find out if you qualify for an HMO Mortgage, our mortgage advisors can talk through options but they will need as much information from you as possible to match your circumstances to the right product and lender such as:
- The number of letting rooms
- Location
- Your experience as a landlord including HMO experience
- Whether you will be managing the property yourself or using managing agents
- If the property has or needs a licence
- Expected or actual rental income
- If there is one or multiple AST agreements
- Types of tenants
- How much you want to borrow
- Type of rate you prefer (tracker or fixed)
- Your credit rating
- Borrowing vehicle (buying personally or using a limited company)
What next for HMO Finance?
Finding the right finance for an HMO can be very complex and time-consuming but JMS Buy to Let Business can take away this pressure and manage the process on your behalf so contact one of our advisors today to source the right lender specifically to your needs and circumstances.
