HMO Property
We recommend reading our comprehensive guide on HMO investing to learn how it can generate more revenue and expand your property portfolio. If you require any assistance, please do not hesitate to contact our team of experts who are readily available to assist you in making informed investment decisions.
HMO investments offer high rental returns by renting out multiple units or rooms with shared facilities. Seek professional advice and adhere to regulations before investing. Our guide is a great starting point and our experts are available to assist you. Contact us for help.
What is an HMO Property
HMO means a house with multiple households. It’s a rental property with shared facilities. Three tenants with multiple households are HMOs, and five or more tenants need a license. Renting per bedroom in HMOs yields higher returns and less vacancy risks than single-family homes. HMOs may require a license from the local authority.
Benefits of Investing in HMO Property
Investing in an HMO property means renting out multiple rooms, which can bring in more money and expand your portfolio.
This type of rental property can give higher returns and fewer empty periods for landlords.
Plus, there’s often strong tenant demand because of the lower entry point. Investing in an HMO property also has great tax benefits – expenses like marketing and repairs can be deducted from taxable income.
HMO properties are safer investments compared to single-family homes because they are rented out to multiple tenants, meaning there are fewer chances of not having anyone to rent them.
Investing in HMO property is a good way to diversify one’s portfolio and offer housing solutions to more tenant types. HMOs also generate higher rental income, which can make it easier to afford loan payments.
What kinds of accommodation to live are called HMOs?
HMO means a house where three or more people rent and share facilities.
Different types of buildings can qualify as HMOs, like houses with separate bedrooms but shared areas, buildings for students, or flats that were converted but not fully self-contained.
However, if a property has separate flats with no shared facilities, it’s not an HMO. Instead, it’s a Multi-unit clock (MUB) or Multi-unit freehold block (MUFB).
What is Multi-Unit Freehold Block
A Multi-Unit Property (MUB/MUFB) is a building with several flats that each have their own entrance and facilities. But, even though there are many flats, legally, it is considered as one property.
If you want to sell or mortgage a flat in a MUB/MUFB, it will be seen as one transaction. These types of properties offer you a chance to make a lot of money from renting, like with HMO’s.
If you want to sell each flat as an individual property, you need to create and report a long leasehold on Land Registry, which a solicitor can help you with. If you invest in an already built big house, you can exchange it into small flats for getting more rent.
HMO Property Requirements and Standards
Different local authorities have varying requirements and standards for HMO properties, making it important for landlords and investors to research their area.
HMO properties require extra management due to multiple tenants, so landlords should ensure they meet legal requirements and safety standards. Regular property inspections, fire safety measures, and written tenancy agreements are necessary.
Licensing and planning permission may also be required, depending on the number of occupants and size of the HMO.
How Can We Help?
We helps you get finance for HMO or multi-unit properties. With their experience and industry connections, they’ll get you the best deals from specialist lenders. They can help with navigating HMO regulations, the application process, and provide advice throughout. Contact us for help with HMO mortgages and make investing in these properties easy.
In Conclusion
To invest in HMO, research laws & rules in your area, we help find lenders for HMO mortgages & multi-unit property loans, expert advice on the loan application process to create successful HMO investments.
FAQ (Frequently Asked Questions)
Can I see if a house has permission to be rented to multiple people?
You can check if a property has an HMO licence by contacting your local council or housing association office. They can tell you if the property has a license. Before investing in an HMO property, you should also find out about other regulations in your area. For example, there may be laws about how much rent you can charge or how many tenants are allowed in each unit.
Can I purchase an HMO property and reside in it myself?
Yes, you can buy a HMO property to live in. But you need to know what your mortgage lender requires. Also, check the local rules before renting out part of the property. Remember, owning an HMO property comes with additional costs such as repairs, maintenance, insurance policies, and various fees. So, make sure to consider everything before you buy.
Should you invest in HMO properties?
HMOs are a good investment if you want to make more money quickly. They usually have more tenants than other rental properties, which means you can earn more money. HMOs are also more flexible with tenants, so you can make money in the short and long term. But you need to consider everything before investing, like insurance, repairs, and safety rules.