However, this does give unlicensed HMOs a negative connotation. It suggests that they are illegal or "fly-by-night". These smaller HMOs are often referred to by local authorities, lenders, and owners as multi-lets, "HMOS not Required To Be Licensed", or "nonlicensable MMOs".
After you have gained some experience in letting property out, you might be ready to move on to renting out HMOs. A specialist HMO mortgage is required to convert an existing property into an HMO, or purchase a new one. If you have an existing property that is financed by an ordinary buy to let mortgage, you should contact your lender to discuss remortgaging the property to an HMO deal.
HMOs are an investment opportunity. HMOs offer fewer "impactful empty spaces": The gap between tenants of a single-occupancy property can be no more than one month. This allows for repairs and redecorating as well as viewings. Rent does not come in. You can reduce your losses by having an HMO where the rent is paid by the remaining tenants. A higher percentage of your expenses may be exempted from tax than a standard BTL.
A traditional buy-to-let model would normally house a couple or three people. Disputes between the members of the household are often resolved without the need to contact the landlord. A landlord will often have an HMO type for student buy to rent or a HMO that is exclusively for working professionals.
What kind of tenants can my HMO target with? - Low cost housing, affordable housing or housing benefit tenants: Sometimes landlords will let their whole properties to the local authorities. They get a discount, but still earn an income. - Working professionals - An increasing number of renters are in their late 20s or 30s. They are seeking higher-spec properties, often with more bathrooms, and less party-life-style tenants. -
HMO buy and let4 bedroom semidetached property with 2 reception rooms1 room converted into a bedroomRent to 5 single-working professionalsMonthly tenant rental income = PS400Monthly landlord income = PS2000Annual rental earnings = PS24,000. You can see why HMO landlords are increasingly interested in HMO properties. It is possible to see a significant difference in gross rental revenue.
Because HMOs are complex, most buy-to-let lenders won't lend to landlords who have not been experienced. Although criteria can vary from lender-to- lender, a minimum of one to two years' experience as a landlord is usually sufficient. Although some lenders will allow first-time landlords to be approved, they will often require you to hire a property agent to manage your property. Our buy to let team can help you determine if you are eligible for an HMO mortgage.