HMO landlords pay utility bills, except if the property has been converted into flats and the title deeds were sent to the land registry.
Landlords have two options for managing their HMO property: a single, joint and severally liable agreement or an individual contract per tenant.
Mortgages purchased to let are usually cheaper in terms rates and fees, and there are more lenders that offer them. Because the criteria are less stringent, they're also more accessible. Despite this, an HMO's potential additional income can often cover additional mortgage costs.
HMO mortgages can be offered by 27 lenders at the time this article was written. 23 of these loans are available to Limited Companies. HMO mortgage rates are higher than those for buy to let because this is a more specific property type. For landlords, rates have become more competitive due to increased competition in this industry. Rates start from 1.64% (individuals) and go up to 2.69% (limited companies).
HMOs are usually restricted to certain places. HMOs may be targeted at students, single professionals, or other tenants. HMOs often have restricted locations. They are usually located in the city centre or close to major amenities and bus routes. It would not be a good idea to set up an HMO in rural areas in the middle and end of nowhere.
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.
An HMO mortgage will require a large deposit. LTV ratios must be between 60% to 75% for most lenders. A minimum of 25% deposit. Lenders will consider rental income when calculating their stress tests. However, they will base their calculations on the rental income from renting the property to one household. Your mortgage should be affordable and with large margins. A mortgage broker will be able to advise you as to how much an HMO mortgage is possible for you (according to your lender).