hmo finance 02
HMO licences can have additional conditions depending on the council. HMO licences may only be requested by local authorities. Without a license, the penalty for renting a licensable HMO is up to PS20,000.
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).
Lenders might accept evidence that you have applied for an HMO license in place of the actual licence. This is because it can take longer and may not always be practical. You may be considered 'fit and proper to operate an HMO if you have the licence. However, it is a good idea to have the license readily available in order to facilitate the application stage underwriting.
HMO licences can have additional conditions depending on the council. HMO licences may only be requested by local authorities. Without a license, the penalty for renting a licensable HMO is up to PS20,000.
My HMO can target which type of tenants? - Low-cost/affordable housing / housing benefits tenants: Some landlords choose to sell their entire properties to the local authorities to be used as low-cost housing. This allows them to earn a steady income while also getting a discount. - Working professionals are increasingly renting their homes into their 30s and 40s. They seek out higher-spec properties with more bathrooms, but they also want stable tenants who live a more peaceful life. -
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.
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.