HMO licenses can be subject to additional conditions at individual councils. You should however be aware of all requirements when applying. HMO licenses are not negotiable if required to be granted by the local authority. The penalty for renting an HMO licensed without a licence can lead to a fine up of PS20,000.
Can you get a business loan for a HMO? - Financing a Commercial HMO It this can limit the amount a landlord can borrow, because HMOs have a higher value than non-HMOs.
HMOs have higher operating costs, and often require more work and time. HMOs require that each room be secured and have safety and health guidelines that are much more thorough than regular buy to lets. HMOs will have higher setup costs than regular buy-to-let.
Finding the right HMO loan for you can be complicated. Lender criteria vary and each one will have different requirements. Our expert buy to let team is available to assist you in finding the right HMO mortgage.
Before you invest, get in touch with the HMO licensing officers at your local authority. Before you make any investment, ensure that you know the requirements of your area. These could include minimum dimensions for kitchen and living space, kitchen equipment, bathroom facilities, number of toilets, showers, firewood, and others.
HMO properties could be for sale, offering attractive "100%+ gross yields". You wouldn't mind a piece of that! However, HMOs can have very low gross yields. These costs include council tax, insurance, utility bills and management costs. Rent arrears are also included. An HMO might yield a return of 8-10% per year, while a single-tenancy buy to let would earn 4-5%.
How much does it cost for an HMO licence to be obtained? Costs for obtaining an HMO license vary by area. Some councils will charge for the number of bedrooms, while others will charge a fixed fee. These fees can vary from a couple hundred pounds to over a hundred. Lenders know the time required to issue a licence. Therefore, they may accept proof when underwriting a mortgage. Being prepared ahead of time will help avoid any delays.