HMO licenses are issued by local councils and can be renewed for up to five years, if approved. HMO licenses are issued for each property, not each landlord. A landlord who has three HMO properties would need a license for each one.
Traditional buy-to-let models would usually house a family, or people who have decided to live together. Disputes can usually be resolved within the household, without the landlord being involved. Therefore, landlords will usually have an HMO type such as student buy-to-let or one that is only for working professionals.
HMOs are often restricted to specific areas. HMOs, for example, are designed to target certain tenants such as single professionals or students. An HMO's location is often restricted to central locations, or areas with easy access to bus routes and other amenities. It would be absurd to have an HMO in a remote location in the middle or even in the middle of nowhere.
HMOs: Why should you invest? - There are fewer "impactful gaps" between tenants: The gap between tenants for a single occupancy property can be as low as a month. This allows for repairs, redecorating, and viewings without rent coming in. An HMO allows you to reduce your losses by renting from the remaining tenants. You may also be able to deduct more costs than with a standard BTL.
HMOs may not be valued equally by lenders. Some will base their valuation on rental income, while others will base it on the HMO being a regular home. This can reduce the amount you are able to borrow, which defeats why an HMO mortgage is needed.
HMOs with no license may not qualify for an HMO mortgage. Lenders may instead consider a buy-to Ð let mortgage.
Before you decide to invest, make sure to speak with your local HMO licensing agent. It is important to be familiar with the local definitions and licensing requirements. This may include minimum sizes for living spaces and kitchens, number of bathrooms or showers, fire apparatus, and other such things.