What is an HMO? - House of Multiple Occupation
If you let a multi-room property to multiple occupants who are not related – such as shared student accommodation – it is a House of Multiple Occupation (HMO).
An HMO is broadly defined as any property in which a washing or cooking area, or a toilet, is shared by three or more people from two or more “households”. Other examples of HMOs can include shared houses, hostels, and shared worker accommodation.
There are many complications that you need to be aware of when letting an HMO. These involve regulations, local authority limitations, licencing, room size and insurance to name just a few.
For these reasons alone, working with an experienced HMO mortgage broker is the best choice you could make before moving forward with your purchase or development.
Criteria for an HMO Mortgage is generally stricter than for a standard Buy-to-Let mortgage. There are some distinct differences that lenders typically apply to HMO mortgages.
Some examples of the typical areas of HMO criteria are as follows:
- Experience – Applicants will need a minimum 12 months track record of owning a Buy-to-Let.
- Occupancy – The maximum number of bedrooms normally eight, however there are lenders that may consider more.
- Loan to Value (LTV)– Typically restricted to 75%.
It is important to check with your local council as to whether a licence if required and what other information and certificates are needed.
Failing to obtain a licence where necessary is a criminal offence and can result in fines of up to £20,000 in England and Wales, and up to £50,000 in Scotland.
To meet the appropriate HMO standards for quality and safety, as enforced by your local council, always check the rules locally.
HMO Mortgage Brokers
At Aspire Financial Services we understand how specialised certain areas of the property market can be. Why not contact us today to speak to one of our specialist HMO Mortgage Brokers and see how we can help you.
Book a free 30-minute introductory call