What is the cost of obtaining a HMO licensure? The cost of obtaining an HMO permit will vary depending upon where you are located. Some councils may charge by the number or bedrooms of a property. Others will charge an additional fee, which can be anywhere from a few hundred to several thousand. Lenders will be aware of the length of time it takes to issue a licence and may accept proof during the underwriting process of a mortgage. However, it's important to plan ahead so you don't get stuck at this point.
HMO mortgages were offered by 27 lenders, 23 to Limited Companies, and 23 to Individual applicants at the time. HMO mortgage rates can be more expensive than traditional buy to lets because they are a specialist type of property. This sector is more competitive than ever thanks to the increased competition. Rates are now starting at 1.64% and going up to 2.69% in Limited Companies.
HMOs can be complex and buy to let lenders may only lend money to experienced landlords. While criteria may vary from lender to lender and are subject to change, typically a minimum of two years experience as a landlord will suffice. While some lenders will consider you a first-time landlord, most will require that you use a property manager to manage the property. Our buy-to-let team will help you determine whether you qualify for an HMO loan.
Before you make any investment, speak to the HMO licensing officer at your local authority. Before you invest, make sure to check the local definitions and licensing requirements. These may include minimum kitchen size, living space, kitchen facilities and number of toilets.
HMOs are not valued by all lenders based only on rental income. Lenders will instead value the HMO as a standard house. This can limit your ability to borrow money, which can defeat the purpose behind an HMO mortgage.
An HMO is a better option for landlords than letting to families. You will be able charge per room individually and thus charge more overall. To do this, you will need a specialist mortgage.
Why Should You Invest in HMOs HMOs, or Houses in Multiple Occupation, are generally more profitable than standard rental properties. What are they? And how easy is it for you to finance them. A House of Multiple Occupation, also known as HMO, is defined as a property with three or more occupants who share the bathroom or kitchen facilities. For properties to be able to operate legally, they must obtain a HMO licence from their local authority. These homes are often referred to as a "house-share" and are very popular among young professionals and students. The rent is usually cheaper than a studio or small apartment. Landlords and property investors also have the benefit of an HMO. Rents from multiple bedsits generally yield higher rental yields that a stand-alone home.