HMO licenses issued by local authorities are valid for five consecutive years if approved. HMO licences must be provided for each property. A landlord might have three HMO properties. Each HMO will require a license.
When assessing the property's value, lenders may take into account the rental income. This is especially beneficial if you have converted the property or are looking to withdraw equity.
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.
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).
Individual tenants love HMOs because they are affordable and fully furnished with all bills. This is especially true for international students, contractors and employees on work visas. HMOs are attractive because they allow you to'move straight in' at a very low cost.
HMOs must have a valid five-year license from the local authority where the property is situated. It is important to ask the relevant local authority about the policy regarding your area of interest. A licence is required for properties with less than five tenants. Because it is dependent on the location, you will have the best chance of submitting your application.
This lends an unfortunate meaning to "unlicensed" HMOs, which suggests they are somehow illegal and fly-by night. So local authorities, lenders, or owners may refer to smaller HMOs as multilets, "HMOS NOT REQUIRED TO BE LICENSED", or "non�licensable HPMOs".