Before you invest, get in touch with the HMO licensing officers at your local authority. Before you make any investment, ensure that you know the requirements of your area. These could include minimum dimensions for kitchen and living space, kitchen equipment, bathroom facilities, number of toilets, showers, firewood, and others.
HMO licenses can be subject to additional conditions at individual councils. You should however be aware of all requirements when applying. HMO licenses are not negotiable if required to be granted by the local authority. The penalty for renting an HMO licensed without a licence can lead to a fine up of PS20,000.
HMO properties could be for sale, offering attractive "100%+ gross yields". You wouldn't mind a piece of that! However, HMOs can have very low gross yields. These costs include council tax, insurance, utility bills and management costs. Rent arrears are also included. An HMO might yield a return of 8-10% per year, while a single-tenancy buy to let would earn 4-5%.
Can you get a business loan for a HMO? - Financing a Commercial HMO It this can limit the amount a landlord can borrow, because HMOs have a higher value than non-HMOs.
While every case is unique, HMO mortgage applications usually take about the same time as other buy to rent mortgage applications. Pre-pandemic we would expect a mortgage offer to take between three and four weeks, followed by four to six more weeks to complete.
HMOs are very popular with individual tenants. They're often affordable and come fully furnished. This is especially true of students, contractors, and overseas workers who are on work visas. HMOs are desirable because of their ease-of-use and low cost.
Finding the right HMO loan for you can be complicated. Lender criteria vary and each one will have different requirements. Our expert buy to let team is available to assist you in finding the right HMO mortgage.