HMO Mortgages

No, you have to take out a buy to let mortgage. Not all buy to let lenders will lend on HMO’s and those that do often have a specialist range of products.

The minimum deposit varies from lender to lender but it would be no less than 25%.

A property falls under the category of house in multiple occupation if it is rented out by 3 parties from different households, but they share the properties facilities such as a bathroom or a kitchen. On property websites you may see this listed as a “house share”. Blocks of flats and bedsits do not count as HMO properties, though a single flat rented by multiple people sharing particular facilities may be qualified as such. In order to set up a property as an HMO, you must contact your local authority.

Like any other mortgage, the lender will instruct a local independent valuer to confirm the property’s value.

To many, becoming a landlord for an HMO property means great reward, as multiple incomes can often contribute to a higher profit margin than if you were receiving rent from a single party, such as a family. The downsides are that these mortgages tend to be more expensive and often entail signing on students or non professionals as tenants, meaning income may be seasonal and inconsistent. Although a stereotype that doesn’t encompass everybody, student tenants are regularly known to leave the property in a less favourable state, requiring further expendable income for repairs.