For Remortgaging & Buying Investment Property In The UK
HMO Offer! Subsequent rate 5% + BBR 75% LTV Product fee: 1.5% of loan As at 16th June 2022 Landlord Mortgage Offer Subsequent rate 4.99% Purchase & remortgage 65% LTV Product Fee: 2% ERCs apply As at 16th June 2022 Short Term 60% LTV Buying & Renovating Conversions Auction Purchase As at 16th June 2022
5 Year Fixed
Buy To Let
5 Year Fixed
Buy & Refurb
1 to 12 Months
Subsequent rate 5% + BBR
Product fee: 1.5% of loan
As at 16th June 2022
Landlord Mortgage Offer
Subsequent rate 4.99%
Purchase & remortgage
Product Fee: 2%
As at 16th June 2022
Buying & Renovating
As at 16th June 2022
FOR MORE DETAILS ABOUT LARGE HMOs, SCROLL DOWN...
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 more than 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 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.
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.
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:
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.
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.
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.
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).
The different specialist lenders in the market have different criteria for the property they are willing to lend against. Some lenders aren't willing to consider properties with accommodation for more than six tenants, so the pool of available lenders for larger properties is more restricted.
This is where you will need the advice of an experienced broker who has access to all the lenders in the market - including those not available to borrowers approaching them directly. Your broker will know which lenders to approach, and will package your application to suit their criteria.
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.
One of our specialist HMO mortgage advisors will be happy to discuss your requirements with you:
I approached Clifton Private Finance to help me get a mortgage as an Expat working in the Far East. I would normally 'cut out the middle man' on something like this and try to get myself a deal directly with the banks, but I am now sold on the broker concept and wouldn't hesitate to use Clifton Private Finance again. There were a number of complicating factors such as being an expat, the stamp duty holiday, the sheer amount I wanted to borrow and the fact I wanted it all wrapped up before the Stamp Duty holiday ended. It is clear to me now that the relationship that brokers have managed to foster with their banks means they can simply pull levers and make stuff happen that us ordinary folk cannot. Put simply, they are worth every penny, will take most of the stress out of the lending process, and seem to have access to deals that you just won't find on the internet. Thank you George and Jan for all your hard work!
Luther was excellent. Very clear in his advice and explanations of products and was able to move things on very quickly when we ran into difficulties with the estate agents. Without a doubt I would recommend Luther to all friends, family and colleagues. Luther was a joy to deal with and took a lot of the stress out of a troublesome transaction, from my end. I would view Luther as real asset to Clifton Private Finance Ltd.
The team at Clifton Private Finance has been outstanding, not only in helping me to obtain a mortgage on a slightly unusual home, but also in continuing to provide support and liaise with the lender and solicitors through to completion. Thank you for making the process of buying my first home much easier.
Sam O'Neill, and the new lender he identified for me, worked tirelessly together using my time constraints, to make sure my mortgage application was completed on time. They are a brilliant company to work with, fast, efficient, open and transparent from the very beginning, and turned a seemingly impossible situation into a viable one. Sam was brilliant throughout the whole process and I would highly recommend him, and his colleague Helen, to anyone without hesitation, I cannot speak highly enough about them.
I was incredibly lucky to find Clifton Private Finance after a search on line as their service has been more than exemplary. My point of contact was Sam 0’Neill and he was happy to help at every stage during the application of the bridging loan, making a stressful process much easier to deal with. He was always available by phone or email and gave prompt answers to queries I had as well as always getting back to me when he said he would. That to me is excellent customer service and I cannot thank him personally or the company enough for the support they have given me.
Adam cannot thank you enough for all your support throughout this arrangement. You have gone more than the extra mile to support us. Without you we would not have got our dream retirement home. You have been most professional and personable. Liz and I would be more than happy if you wanted to use us a reference with respect to any future clients.
Nigel & Liz K - Bristol
You have certainly shown me that you do everything for your clients, including tolerating their excessive emails and questions for updates. I have been kept in the loop, from yourself, about why the delays were occurring (Nationwide, post etc) which I would like to highlight that I really appreciated. I certainly will be able to recommend you to others as and when the need arises.
I recently contacted Clifton Private Finance after a Google search for bridging finance providers and was immediately struck by their efficiency and support. Forms were emailed over almost immediately and the necessary finance was arranged within a few days. None of the other companies I contacted came close to their professionalism, and the quote that I eventually received was impressive. Thank you Adam, your help has enabled us to reserve the house that we wanted and I certainly recommend you to others.
Mr M. R. - Oxford
Absolutely brilliant. The service was first class, got everything sorted efficiently and were always friendly. Any fees were negligible compared to the service offered. Robert was particularly outstanding.
My advisor, Robert, was very helpful in finding the mortgage to suit me. He kept me up to date throughout the process and dealt with any issues when they arose.