01825 749721

HMO Finance

For more than four tenants, you or your agent will need a license to manage an HMO.

HMOs: What are They and How to Finance Them

HMO application |

A House in Multiple Occupation (HMO) means any property with shared facilities and individually rented out bedrooms to three or more occupants.

Renting rooms on an individual basis can be an attractive option for investors and landlords as it can increase the overall income earned from a property, making it a more profitable asset than a regular rental to a ‘single’ household.

For a standard household of up to four occupants, you do not need a license.

For more than four tenants, you or your agent will need a license to manage an HMO.

Get in touch with Hunter Finance to discover your property development finance options

To discuss your lending options for residential or commercial properties, call us today on 01825 749 721.

The growing trend of HMOs

These kinds of properties are gaining traction in city centres, attracting students and young professionals rather than families or prime tenants.

The price of renting an individual rent in an HMO is a more affordable option than renting a complete flat or house.

Types of HMO:

Investors and landlords can set up multiple-occupant properties through an individual or joint contract. Read more.

  • Individual contracts: Each tenant pays their own rent separately so that if one tenant does not pay, the other residents are not responsible.
  • Joint contracts: One overall agreement and rent. All tenants are collectively responsible for rent, as well as all utility bills and care of the property.

How do I fund an HMO?

how to acquire finance to develop propertyHMOs are sometimes considered as high-risk assets, so lenders can be less willing to provide mortgages for multiple occupation properties.

In fact, some Buy-to-Let (BTL) mortgages will disallow you from changing your property to an HMO.

Many financial directors consider Commercial Mortgages to be the best funding option for properties with multiple occupancies.

Get in touch with Hunter Finance to discover your property development finance options

These loans are used to buy premises for business or investment purposes.

What is the HMO application process?

Applying for either licensed or non-licensed HMO finance will include a number of considerations, and individual brokers will have a series of criteria, and varying costs and interest rates which tend to be higher than BTL mortgages.

HMO valuations will often be calculated by:

  • Considering the price of the property if bought as a single dwelling
  • Potential rental income or investment value
  • Your experience as a landlord

Other factors for consideration will include:

  • Number of rooms available to let
  • Expected rental income
  • Location
  • Specification of the property
  • Whether the HMO will be self-managed or managed by an agent
  • Tenants
  • Loan amount
  • Credit ratings

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How can we help?

Operating in London, Surrey, Hampshire, Sussex and other home counties, we are private property finance directors who have been offering financial solutions for over a decade.

Discuss your options and eligibility today. Enquire now or call us on 01825 749 721.

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If we can help we will say so, if we can’t we will be able to point you in the right direction or suggest alternative financial vehicles.


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