Specialist

HMO Mortgages

For Remortgaging & Buying Investment Property In The UK

Clifton private finance

We can source mortgage finance for houses in multiple occupation in the UK: from £150,000

Expert advice on your finance options if you own houses in multiple occupation.
Our HMO property buy to let mortgage service provides:
  • Exclusive rates from 2.79% APR
  • Advice on finance products available for HMO lending
  • HMO mortgage finance from £150,000
  • First-time landlords welcome
  • Licensed and unlicensed HMOs
  • Funding solutions for portfolios with no limit on number of properties
  • Interest-only lending terms available
  • Refurbishment & short term finance options up to 100% LTV with additional security

HMO

Tracker

HMO Offer!

2.99% APR

Subsequent rate 5.39%

Product Fee  £0

As at 16th September 2019

Buy To Let

2 Year Fixed

Landlord Mortgage Offer

1.99% APR

Subsequent rate 4.75% + BBR

Product Fee 2.5%

As at 16th September 2019

Refurb

1 to 12 Months

Short Term

0.44% pm

Buying & Renovating

Conversions

Auction Purchase

As at 16th September 2019

Contact Us

Thank You for your interest - please complete the form below and a member of our team will be in contact.


Through our specialist market knowledge we can deliver enhanced, bespoke or exclusive terms based on your requirements.  
Call our HMO mortgage team on 0117 959 5094 to discuss your requirements.

FOR MORE DETAILS ABOUT HMOs, SCROLL DOWN...

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Buy To Let Mortgages For HMO Properties

First-time investors and experienced single-tenant landlords may be attracted by the attractive returns offered by a property with multiple tenants – also known as a multi-let, or a house in multiple occupancy (HMO).

HMOs range from a house-share arranged by a group of friends, to a house or flat provided for a group of students sharing, to high-spec accommodation for young professionals or low-cost housing for shift-workers or housing benefit recipients.

The projected annual returns of 4-5% for a straightforward buy-to-let (BTL) can be doubled for a multiple-occupancy letting. Which is more than enough to persuade many landlords to tackle the additional licensing and finance requirements. But the finance issues may be more complex, and require specialist advice.

What is an HMO?

A house in multiple occupation (HMO) is any rental property with shared facilities (such as bathrooms and kitchens) which is rented out to three or more people who aren’t part of a single "household" (usually a family). They’re what’s often known as a "house share".

What many people refer to as an HMO is actually a Large HMO, which is a rental property with five or more tenants, where the tenants share toilet, bathroom or kitchen facilities.  

Do I need a licence to run an HMO?

You don’t need a licence to run a standard HMO with four or fewer occupants. Landlords do need an HMO licence to operate a Large HMO, which will usually be valid for five years - which is why they are sometimes referred to as Licenced HMOs.

Smaller HMOs, which don't need to be licensed, have commonly been referred to as "unlicensed HMOs," but the term can seem to suggest that they are somehow illegal or fly-by-night. Some owners, local authorities and lenders refer to these smaller HMOs as multi-lets, "HMOs Not Required To Be Licensed," or "non-licensable HMOs".

The different mortgage lenders for these specialist buy-to-let mortgages may have different definitions and requirements for their HMO lending.

Tenants to target for HMOs

With the cost of buying a home still rising, the demand for affordable rented accommodation remains very strong. Local listing sites (Gumtree, Zoopla, Rightmove…) will help first-time landlords to assess the strength of demand from prospective tenants:

What kind of tenancy agreement do I need to run an HMO?

Landlords can manage their HMO property by setting up one "joint and severally liable" agreement covering all the tenants, or using an individual contract for each tenant.

Joint contracts

Individual contracts

How profitable is an HMO?

Prospective landlords may see HMO properties advertised for sale offering “100%+ gross yields,” but you’ll need to be aware that the costs of setting up and running HMO properties are considerable, so the key figure is net yield.

HMO landlord costs include:

Profits may be maximised by running the property through a limited company structure: you’ll need to take advice from an accountant / financial adviser.

How to finance an HMO

There are nearly 40 lenders operating in the buy to let mortgage market, offering approximately 1,500 different mortgage products. Many of them can only be accessed by a broker engaged to act on your behalf.

What kind of finance do you need?

Lenders will have different criteria for the number of rooms in an HMO they will consider, and how the calculate the value of the property (usually as a combination of Bricks & Mortar and Investment value).

HMO borrowing stress test calculation

Lenders commonly apply a slightly higher “interest coverage ratio” (currently around 1.7%) to HMO mortgages, compared with standard BTL mortgages (usually 1.25%), to cover the perceived high risk of a multi-tenanted property.

An experienced broker will be able to identify the most appropriate – and cheapest – finance for you in this specialised area of the buy to let market, and will package your application to make sure it meets the lender's criteria. 

Call Clifton Private Finance

One of our specialist HMO mortgage advisors will be happy to discuss your requirements with you:

0117 959 5094

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