How to secure a House of Multiple Occupancy mortgage

A House of Multiple Occupancy mortgage, or more commonly known as an HMO mortgage, is a great way for investors to maximise the rental income they receive from a property. It involves letting out as many rooms in a property as they can, to tenants who are not all members of the same family and not on the same Assured Shorthold Tenancies (ASTs).

For property investors, a HMO property can be a good cash cow in comparison to letting a property on a single AST, as the rental income achieved for the same property can be two to three times higher compared to letting it to a family.

However, for lending purposes, HMO properties are not measured in the same way, as they are actually considered to be riskier than a standard buy to let property. Consequently, most buy to let lenders do not accept HMOs or if there are 5 or more people on an AST.

There are specialist lenders who are willing to lend on HMO properties, however, they require very particular criteria. The property has to have a HMO licence (dependent on the local authority and how many bedrooms there are), so if you are converting a property to a HMO with more than 6 rooms, you will need to register a change of usage for the property. Equally, some of these specialist lenders require you to have either HMO letting experience or general buy to let experience of two years or more.

On top of all of this, the property has to have fire doors in place along with working smoke alarms, gas certificates and tested electrics, in order to be acceptable.

HMO mortgages can be obtained either in personal names or via a limited company. Most lenders in this market will limit their product on the number of bedrooms which are being let out, with most stopping at six and a handful at seven and eight bedrooms. If the property has more than eight rooms, commercial lending would be a further option to consider.

ARTICLE BY

Michael Frimpong

MORTGAGE BROKER

Enness Private

We arrange large mortgages secured against international property for global individuals.

You May Also Enjoy

Breaking News

Breaking Property News 02/04/25

Daily bite-sized proptech and property news in partnership with Proptech-X.   Made Snappy 360 appoints new CEO and Sales Director to accelerate growth in the property technology space Made Snappy 360, the fast-growing proptech company known for its virtual tours and floor plan technology, has appointed industry veteran Mark Beresford-Ward as its new Chief Executive…
Read More
Home and Living

Expert reveals the exact date parents must start renovating in time for summer

Loft and attic renovations are gaining popularity this spring, with nearly 11,000 monthly Google searches, highlighting them as one of the top home renovation projects Brits are planning in the coming weeks. Loft conversion specialist Sally McClean, loft conversion specialist from Enfields loft conversions Rooftop Rooms, shares the exact dates homeowners should start their renovations…
Read More
Breaking News

Nationwide HPI – Annual house price growth steady in March

Annual rate of house price growth remained stable in March at 3.9%, unchanged from February Northern Ireland remained the top performing area, with annual price growth accelerating to 13.5% London weakest performing region, with 1.9% year-on-year rise Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, said: “UK house price growth remained stable in March…
Read More
Breaking News

Tenants and landlords must be aware of new electrical safety standards in Northern Ireland

Propertymark has urged tenants and landlords in Northern Ireland to be aware of new electrical safety standards that begin on 1 April 2025.   On 19 November 2024, the new regulations were approved by the Northern Ireland Assembly in response to a public consultation throughout September 2023.   From 1 April 2025, the regulations introduce the responsibility for…
Read More
Countryside
Breaking News

End to rent adjudication measures in Scotland

Letting agents across Scotland will welcome the news that the temporary rent adjudication measures end on 31 March 2025. The Cost of Living (Tenant Protection) (Scotland) Act 2022, which temporarily protected tenants by controlling rent, limiting evictions, and setting up rent review measures, ended on 31 March 2024. However, some of these measures were extended…
Read More
Breaking News

Propertymark comments on Stamp Duty threshold changes

Commenting on the Stamp Duty threshold changes commencing from tomorrow, 1 April, Toby Leek, President of NAEA Propertymark, the leading professional body for estate agents, said: “There will be many people completing on the sale of their home today to save potentially thousands of pounds from tomorrow onwards. “Some will also be disappointed that they…
Read More