Before you make an investment, talk to your local HMO licensing office. Make sure you are familiar with your local licensing requirements and definitions. They may include minimum living and kitchen space sizes, kitchen facilities, toilet numbers, showers or baths, fire-pit equipment, etc.
HMO mortgage lenders have additional requirements for the property. Some mortgage lenders have specific requirements about the property. For example, they may require that only one kitchen be available to tenants or that tenants share common seating. Others limit the number and height of bedrooms and storeys. Find a lender that will allow you to renovate your property before you lease it. A mortgage broker is able to assist you in navigating all the restrictions and conditions necessary to find a lender willing to lend.
A House In Multiple Occupation can offer more income than traditional buy to rent. Landlords have the opportunity to maximise rental incomes due to high rental demand in the UK. The right mortgage is key to maximising the rental income.
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 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.
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.