HMOs are rented by young professionals and students who are unable to rent whole properties or aren't yet settled enough to live with a partner. It is more affordable to rent a single room than an entire house, but the rents for the whole property are usually higher than the rents that could be charged to a single family. The HMO allows landlords to make a greater rental income.
HMO Buy to Let4 bedroom semi detached house with 2 receptions rooms1 reception room converted into a bedroomRents to 5 single-working professionalsMonthly renting income per tenant = PP400Monthly renting income = PP2000Annual rental revenue = PL24,000. The above example illustrates why HMO property owners are more interested in them. The difference in gross rent income can be very significant.
HMOs: Why should you invest? - A higher rental income: As a rule of thumb, you can expect to net approximately twice the rent. Four-bedroom houses can be let out to one family at PS800 each month. This compares with four separate tenants who pay PS400 per month. You may charge rent inclusive of all bills to attract tenants. However, your costs could be significantly higher.
You should also consider void periods. An HMO has more void periods than a traditional buy-to-let. HMOs may have higher maintenance costs than traditional buy-to-let models. This is due to shared communal areas like bathrooms, kitchens, and living rooms (where appropriate).
Number crunching will make your HMO more profitable. Our HMO mortgage advisors are experts and can help maximise your rental income. Securing the best deal for your HMO is key to making it profitable. Majority of lenders that offer preferential rate often do so through mortgage brokers.
An HMO mortgage is required if you rent to more than three tenants coming from different households. Because your property is not eligible for a regular mortgage to buy to let, they are only for single-household tenants. You could be sued by lenders if you took a regular mortgage on an HMO home.
What is an HMO Mortgage? HMO mortgages are mortgages that landlords use to rent out their properties to more than three tenants. These mortgages are specialized in buy-to-let and have key differences.