What is a HMO and what does it mean? A house under multiple occupation (HMO), or property with shared facilities, such as kitchens and bathrooms, is one that's rented to more than one person. This is typically a family. To run an HMO standard with four or less occupants, you do not need a license as a landlord. HMOs are subject to different mortgage requirements than buy-to -let mortgages.
A House in Multiple Occupation or HMO is a property which is rented to three or more tenants. The unrelated tenants can share facilities like a bathroom or kitchen. HMO lets landlords rent the property to multiple households rather than just one.
HMO mortgages may be needed if your property is rented to more tenants than one tenant from different households. This is because the HMO mortgages are not designed for single-household tenants and won't allow you to qualify for regular buy to rent mortgages. If you do take a regular mortgage for an HMO property you could be violating the terms of the mortgage, which could result in lenders taking legal action.
Common areas are often left 'as is' because no one wants to clean up another's mess. To maintain their property, landlords might have to clean up or hire cleaners.
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 that don't require licenses may not be eligible for an HMO loan. Therefore, some lenders might only give you a buy-to-let mortgage.
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.