Buy-to-Let HMO Mortgage

How big can HMOs be?

To be eligible for an Buy-to-Let HMO mortgage, your property needs to meet certain conditions. As a minimum, an HMO must have at least 3 tenants living in it as a single household, sharing a toilet, bathroom, and/or kitchen facilities. A home will be considered a large HMO if it has at least 5 tenants who share facilities.

Do you place limits on how large the HMOs you lend on can be?

No, we have no room limits on our HMO Buy-to-Let mortgages.

Will the number of rooms in my HMO affect the loan or your requirements?

Across all our BTL mortgage variations, deals are split into 4 tiers. Tier 1 mortgages are for our most straightforward cases, with tier 4 mortgages reserved for the most complex of cases.

Within our Buy-to-Let mortgage for HMO properties, investors will fall into either tier 2, 3, or 4. If you’re HMO property has 6 or fewer beds, you’ll sit in the tier 2 category. Tier 3 mortgages are offered to those investing in properties with up to 12 beds. Beyond this, you’ll likely sit within our tier 4 range.

Substantial HMO investments, with 7 or more rooms, may require a commercial valuation. Your assigned underwriter will break down these details and guide you on what’s needed.

Do HMO landlords need a license?

If you rent out a property as a HMO in England or Wales, you must check in with your council to see if a licence is required. Separate local authorities will have different rules on where licences are needed.

If you’re renting out a large HMO however, you must have a license, regardless of where the property is based. Your local authority will guide you on the licensing application process, and guidance can be found on the government’s website.

Our buy-to-let mortgages for HMO properties may require evidence of a local authority licence, or hold a condition for a license to apply following a purchase.

For HMO property investors, an Article 4 Direction may catch them out here. Generally, changing a single dwelling house (use class C3) to a small HMO shared by up to six unrelated residents (use class C4) does not require planning permission, whereas larger HMOs will.

But, an Article 4 Direction can be made by a local planning authority to remove certain permitted development rights in all, or part of, its area. In short, this may result in planning permission being required for certain types of developments that would not otherwise require an application for planning permission.

It’s important to get your license situation sorted as soon as possible, as landlords could face unlimited fines for renting out an unlicensed HMO.

What kind of tenants typically live in an HMO?

The type of properties our buy-to-let HMO mortgages are used for can be occupied by a wide range of tenants. Typically though, HMOs tend to be popular with students or young professionals looking for lower cost accommodation.

They can also be utilised by holiday seekers, certain state benefit claimants, or families. Regardless of who you’re renting to, you need to focus on your requirements. Your HMO property, especially if it’s large, will need to meet certain standards and obligations. This is where the licensing rules will come into play.

Do you offer mortgages for other types of larger investments?

As a specialist lender, we can accommodate several large-scale investment strategies. On top of HMOs, this includes multi-unit freehold blocks (MUFB) of up to 30 units, large portfolios of properties up to £10m, and multiple properties on one loan.

Are your HMO buy-to-let mortgages available to first time buyers/landlords?

We pride ourselves on being a flexible lender. All our products are available to first time investors, along with seasoned portfolio owners. But, inexperienced landlords, who have been in the market for less than a year, will be limited to our tier 2 – 4 mortgages.