Home of Multiple Occupation (HMO) Mortgages

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Home of Multiple Occupation otherwise known as HMOs

What are they?

They are properties typically let to more than one person/family. A good example would be a property let out to students. Generally speaking, the tenants would have their own room but there would be communal areas such as bathrooms and kitchens.

There are 2 types of HMO properties, Licensed and Unlicensed. The definition does vary from council to council, an example Licensed HMO definition would be:

  • Three storeys or more (including usable basements or attics); and
  • Is occupied by five or more people;
  • Those people form two or more households;
  • Tenants share some amenities like kitchen, bathroom or laundry.

Some councils will charge an annual fee for licensed HMOs.

If it does not meet the above criteria then it could be classed as an unlicensed HMO. The difference between the 2 typically involves what would be needed from a Health & Safety perspective.

Where can a broker help?

We have done a good number of HMOs over the years. There are a few areas where HMO BTLs can fall down, examples would be if there are locks on internal doors, if the property is in a mostly student area, how much the rental income would be if the property were to be let to a single person/family.

It is quite a specialised part of the market and using a broker with experience can not only help to save you time but also money. We have been doing HMO BTL mortgages for the last couple of years and have a very good understanding of the pitfalls to avoid.