HMO landlords often pay the utility bills of the property unless it has been converted into flats with separate title deeds from the land registry.
A traditional buy to rent property typically can accommodate one person or the entire family. A household would make a single rental payment each week or month. The household would also have to pay utility bills. These are commonly referred as'singlelets'.
Students and young professionals rent HMOs because they may not have the financial means to rent an entire property and can't move in with their partner. Although renting a room is cheaper than renting an entire property, the total rent for all rooms is often more than what could be charged to one family. An HMO can provide a landlord with a better rental income.
HMOs that don't require licenses may not be eligible for an HMO loan. Therefore, some lenders might only give you a buy-to-let mortgage.
HMOs can be considered higher-risk than standard BTLs. HMO tenants move around more quickly than standard BTL tenants, and there is a greater risk of voids. They can be less committed as tenants to their property as their home. This could mean that they are less responsible for its care and maintenance. Additionally, it can be difficult to identify any issues or damage with a specific tenant.
What type of returns can I expect to receive from an HMO
There are a small number of UK specialists who will lend on large HMO property and understand the risks associated with multiple tenants. They each have their own definitions for HMOs and what they will lend against. A broker can help you create your application and match you up with the right broker. CMB is an experienced broker who can package your application in a way that suits the lender. This speeds up the entire application process.