Students and young professionals often rent HMOs. Renting a room in a property is less expensive than renting the entire thing. However, the average rent for all rooms is higher than what a family could pay. HMOs offer landlords a better opportunity to earn a higher rental yield.
HMO Values - The methods used by lenders to value properties can vary. Lenders can use traditional surveyor inspections, and compare it to similar properties in the area. If there is no HMO in the area then the valuation will take into account the value achieved as though it were a single family. However, this doesn't account of the extra income HMOs usually attract by having multiple rental earnings, which can limit your ability to borrow.
HMO mortgages will be required for rents to more then three tenants. The reason is that your property wonÕt be eligible for a regular Buy to Let mortgage. They are only intended for single-household tenants. If you were to apply for a regular mortgage to an HMO property, it would be a violation of the mortgage terms. Lenders could take legal action.
Finding the right HMO finance can be challenging. There are many factors to take into consideration, not least because each lender has its own criteria. Our buy to let experts will help you to find the right HMO mortgage.
Lenders may accept evidence to support an HMO licence application in lieu of the actual license. However, this is more time-consuming and not always feasible. On the condition that you have the license, you might be deemed 'fit to run an HMO'. But, if possible, the underwriting process will be facilitated if the license is readily available.
HMO licences may be issued by local councils. These licenses are valid for five-years if they are approved. HMO licences will be issued to each property, and not to each landlord. In other words, a landlord will need a license for each HMO property if each HMO requires one.
HMOs are considered to be more at-risk than standard BTLs. HMO tenants have a tendency to move quickly and are often unrelated, which can increase the likelihood of voids or unpaid rentals. They might be less committed and take on less responsibility for the property's care and maintenance. A tenant may be more difficult to spot if the property is damaged or has problems.