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.
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.
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.
These loans are used to buy premises for business or investment purposes.
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:
Other factors for consideration will include:
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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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