Lenders may accept evidence to support an HMO licence application in lieu of the actual license. However, this is more time-consuming and not always feasible. On the condition that you have the license, you might be deemed 'fit to run an HMO'. But, if possible, the underwriting process will be facilitated if the license is readily available.
HMO properties have higher yields, but are more complicated to set up. HMO licenses are required depending on the nature of HMO properties.
There are also void times to be aware. HMOs tend to have longer void periods than traditional buy to rent. HMOs are more expensive than traditional buy-to let models and landlords might have to pay higher maintenance bills. This can be due to the use of communal areas such bathrooms, kitchens, living rooms and other common spaces (where available).
A traditional buy to rent property typically can accommodate one person or the entire family. A household would make a single rental payment each week or month. The household would also have to pay utility bills. These are commonly referred as'singlelets'.
What are the expected returns from an HMO
What is an HMO loan? HMO mortgages are designed for landlords who wish to rent out their property more than three tenants. These specialist mortgages for buy-to let have key differences.
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.