HMO buy to Let4 bedroom semi-detached home with 2 reception rooms1 converted bedroomRent to 5 single working professionalsMonthly rent income per tenant = PS400Monthly Rental Income = PS2000Annual Rental Income = PS24,000. It's easy to see why HMO properties are being sought after by more landlords. The difference in gross rental income is quite remarkable.
Because HMOs are complex, most buy-to-let lenders won't lend to landlords who have not been experienced. Although criteria can vary from lender-to- lender, a minimum of one to two years' experience as a landlord is usually sufficient. Although some lenders will allow first-time landlords to be approved, they will often require you to hire a property agent to manage your property. Our buy to let team can help you determine if you are eligible for an HMO mortgage.
HMO mortgage lenders will have specific requirements regarding the property. Some lenders will require that the property has only one kitchen or have communal seating for tenants. Others may limit the number of bedrooms and floors. You will need to find a lender if you plan to renovate the property prior to letting it out. A mortgage broker will help you navigate these restrictions and conditions in order to find a lender who is willing.
HMO Valuations: Lender methods for valuations can vary slightly. Lenders may use traditional surveyor inspection, as well as comparing the property to similar properties within the same area. If there are no other HMOs in your area, the valuation will be done based on the sale price as if it were one household. This method does not account for the additional income HMOs can attract from multiple rental incomes. It limits the amount that you can borrow.
HMO mortgage rates tend be higher than buy to let mortgages. HMO mortgage rates tend to be higher than standard buy-to-let mortgage products due to the lower competition among lenders. HMO-friendly lenders will typically charge slightly higher mortgage rates and fees than those who are not willing to lend on the HMO. An HMO should have sufficient income to cover the mortgage, utility bills, and maintenance.
Multi lets can be thought of as HMOs. They are rented out to unrelated tenants who share communal facilities within the properties. But, they don't have licenses.
What is a HMO investor? - HMOs are an increasingly appealing form of property investment for landlords with years of experience and those new to the sector. A house in multiple occupation (HMO) is a property that is rented by at least three people who are from different households. The tenants share facilities, such as kitchens and bathrooms.17 Jun 2021