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A House in Multiple Occupation (HMO), is a property rented to more than one tenant. They may share facilities, such as a bathroom and kitchen. HMOs allow landlords to rent out a property to more than one household.
Lenders might accept evidence that you have applied for an HMO license in place of the actual licence. This is because it can take longer and may not always be practical. You may be considered 'fit and proper to operate an HMO if you have the licence. However, it is a good idea to have the license readily available in order to facilitate the application stage underwriting.
HMO mortgages may be needed if your property is rented to more tenants than one tenant from different households. This is because the HMO mortgages are not designed for single-household tenants and won't allow you to qualify for regular buy to rent mortgages. If you do take a regular mortgage for an HMO property you could be violating the terms of the mortgage, which could result in lenders taking legal action.
A House in Multiple Occupation (HMO), is a property rented to more than one tenant. They may share facilities, such as a bathroom and kitchen. HMOs allow landlords to rent out a property to more than one household.
HMO Valuations- Lender methods can vary when it comes to valuations. Some lenders combine traditional surveyor inspection with comparing it with like-for-like properties in the same region. If there are no HMOs within the area, then the valuation is based upon the amount achieved as if it was a single household. The method doesn't take into account the extra income HMOs typically attract through multiple rental incomes. This can limit the amount you are able to borrow.
What is the cost of obtaining a HMO licensure? The cost of obtaining an HMO permit will vary depending upon where you are located. Some councils may charge by the number or bedrooms of a property. Others will charge an additional fee, which can be anywhere from a few hundred to several thousand. Lenders will be aware of the length of time it takes to issue a licence and may accept proof during the underwriting process of a mortgage. However, it's important to plan ahead so you don't get stuck at this point.
HMO properties generate higher yields but are more difficult to setup. HMO licences might be required depending on what the HMO is.
HMO licenses can be subject to additional conditions at individual councils. You should however be aware of all requirements when applying. HMO licenses are not negotiable if required to be granted by the local authority. The penalty for renting an HMO licensed without a licence can lead to a fine up of PS20,000.