17 Jan 2020

Houses in Multiple Occupation

The Society has recently launched a range of mortgages for Houses in Multiple Occupation (HMO).

Our expansion into HMOs within the Buy-to-Let sector enables landlords to purchase a property on an HMO let basis; for example, a house share through multiple Assured Shorthold Tenancy agreements. To qualify as an HMO, a property must be rented to at least 3 individuals who share kitchen and bathroom facilities. Additionally, HMOs require a licence that must be renewed every 5 years.

Post EU referendum, HMOs have become increasingly popular, particularly in cities and larger towns due to their flexible and affordable nature for tenants. This, in combination with Brexit uncertainty, makes investing in HMOs a viable option for many landlords. However, as HMOs require further planning and licensing legislations and fire safety regulations than single lets, their upkeep is more demanding.

With the typical household declining, a shift has occurred from single lets to HMOs, benefitting both landlords and tenants. Unlike single lets, rental void periods are less likely to occur with HMOs – if one tenant moves out, the remaining tenanted rooms ensure inflow of rent. However, it must be acknowledged that HMOs often experience higher tenant turnover than regular tenancies, meaning that tenant related costs can occur more frequently.

For eligible landlords, the Society is proud to offer a Two-Year Fixed HMO/Multiple-unit Freehold mortgage product at 3.59% up to 75% LTV. This product comes with a Product Fee of 1.5% of the loan amount and an Early Repayment Charge (ERC) of 2% will be charged on the amount repaid during the fixed rate period. Capital repayments of up to 5% of the original loan amount, per annum, are allowed in each of the first two years, without an ERC. The loan reverts to the Standard Variable Rate after the fixed rate period which is currently 5.24%.

Click here for more details.



Property Investments UK (2019) The Cases For And Against Investing In HMOs in 2019. Available at: https://www.propertyinvestmentsuk.co.uk/case-for-against-hmo-investment/ (Accessed: 24 September 2019).

Smart Property (2019) How Could Brexit Impact the HMO Property Market? Available at: https://www.smartproperty.co.uk/blog/how-could-brexit-impact-the-uk-property-market (Accessed: 24 September 2019).

What Mortgage (2019) The pros and cons of adding an HMO to your property portfolio. Available at: https://www.whatmortgage.co.uk/feature/pros-cons-adding-hmo-property-portfolio/ (Accessed: 26 November 2019).

Gov.uk (n.d.) House in multiple occupation licence. Available at: https://www.gov.uk/house-in-multiple-occupation-licence (20 December 2019).