HMOs are an excellent investment. - Higher rental income. As a rule, you could expect to earn roughly twice as much rent. One example is a four-bedroom house that's let to a family for PS800 per months, and four other tenants paying PS400 each. In order to attract tenants you may charge rent including bills, which will make your costs much higher.
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.
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.
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.
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.
What tenants can I target through my HMO? - Low-cost / affordable Housing / Housing Benefit Tenants: Some landlords let their entire properties to local authorities to use as low cost housing. In return, they get an income stream and a discount. - Professionals: A growing number of working professionals rent their properties into their late 20s to 30s. They prefer higher-spec properties (often having more bathrooms), but are more stable and live a quieter life. -
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.