What is an HMO? - House of Multiple Occupation
If you let a multi-room property out to multiple occupants who are not related – such as shared student accommodation – it is a House of Multiple Occupation (HMO) There are a lot of 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 that reason, you should always work with an HMO mortgage broker.
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.
The criteria for an HMO Mortgage is generally more strict. There are some distinct differences that lenders will typically apply to HMO mortgages. Examples of some of the typical areas of HMO criteria are as follows:
- Applicants will need a minimum 12 month track record of owning a buy to let.
- Occupancy – The maximum number of bedrooms applied by the majority is eight however there are lenders that may consider more.
- Loan to Value (LTV)– Typically restricted to 75%
It’s important to check with your local council whether a licence if required; 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.
In order to meet the appropriate HMO standards for quality and safety, as enforced by your local council, always check rules locally.
HMO Mortgage Brokers
At Aspire Financial Services we understand how specialised certain areas of the market can be. Why not contact us today to speak to one of our specialist HMO Mortgage Brokers and see how we may be able to help you.
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