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HMO Valuations- Lender methods can vary when it comes to valuations. Some lenders combine traditional surveyor inspection with comparing it with like-for-like properties in the same region. If there are no HMOs within the area, then the valuation is based upon the amount achieved as if it was a single household. The method doesn't take into account the extra income HMOs typically attract through multiple rental incomes. This can limit the amount you are able to borrow.

HMO mortgages are only available to experienced landlords. This means that lenders may not accept applications from those who have been landlords for more than two years and/or have experience with HMO letting. There may be additional requirements from lenders. Lenders may have additional requirements if you are a first landlord.

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Why invest in HMOs HMOs (Houses in Multiple Occupation) are often more profitable than standard rental properties. But, what exactly is this and how easy can you finance them. A House of Multiple Occupation (HMO), is a property that has three or more occupants sharing a bathroom or kitchen facility. They are also unrelated. Properties require an HMO licence from the local authority in order to meet regulatory standards. This is often called a house-share. It's a popular option for young professionals and students, as rent is generally more affordable than a small studio or flat. A HMO can also be a benefit to landlords and property investors, since multiple bedsits often yield higher rental returns than a stand-alone purchase to let.

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HMOs require a five-year licence from the local municipality where the property is found. It is vital to speak with the relevant authority regarding the policy in your particular area. There are some exceptions to the rule. Licences can be required for smaller properties or properties with fewer occupants. The area will affect the application process so make sure you have all the necessary information.

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HMOs can be more complicated to manage than traditional buy to rent models. HMOs often have shared facilities, which can lead to tenants falling out. In addition to being a landlord you might also find yourself as a mediator between tenants that don't agree.

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HMO landlords are likely to pay utility bills for their property, unless it was converted into flats or had separate title deeds through the land registry.

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A large deposit is required for an HMO mortgage. LTV ratios between 60% and 75% are required by most lenders (i.e. Minimum 25% deposit While lenders may consider potential rental income in their stress test calculations, they will usually base their sums based on the rental income that you would get from renting the property to one household and not individuals. The mortgage must be affordable to you, and have large margins. A mortgage broker can help you determine how large an HMO mortgage mortgage you can afford according to your lender.