A Buy-to-Let HMO mortgage allows property investors to purchase a house in multiple occupation. It is designed for landlords looking to target specific tenants in this sub-sector, which may include students or young professionals.
To get your buy-to-let HMO mortgage application started, you will need to send through an enquiry. This can be done online, over the phone, or via email. Once we receive your initial details, we’ll assign you with an underwriter who will be in touch within 4 hours. They will gather a few basic details from you, and provide an indicative tier, applicable rate, and loan size.
Your underwriter will then request a small number of documents from you to progress the deal, so long as you’re happy to move forward. Once we have what we need, we’ll move to issue credit approved terms via a Decision in Principle (DIP). These terms will be verified by our Credit Committee, and all of this can be completed within 24 hours.
Once you have signed the DIP and covered the valuation and admin fees, we can get your HMO valued. Your assigned underwriter will handle everything, working with our panel of valuers to verify the security’s details match up with the DIP. Again, valuations are usually instructed within 24 hours of fees clearing.
As we reach the final stages, we’ll work with trusted solicitors to move the deal towards completion. They’ll review the details, issue contracts, and work to get your deal completed on time. We instruct the lawyers we work with quickly and throughout; you’ll be kept in the loop. If there any complications or issues, you’ll be the first to know.
So long as everything is accounted for, we will issue your funding, and you’ll be free to use it for your HMO investment. From start to finish, we may be able to deliver capital in as little as a week from your initial enquiry.
To be eligible for an Buy-to-Let HMO mortgage, your property needs to meet certain conditions. As a minimum, an HMO must have at least 3 tenants living in it as a single household, sharing a toilet, bathroom, and/or kitchen facilities. A home will be considered a large HMO if it has at least 5 tenants who share facilities.
No, we have no room limits on our HMO Buy-to-Let mortgages.
Across all our BTL mortgage variations, deals are split into 4 tiers. Tier 1 mortgages are for our most straightforward cases, with tier 4 mortgages reserved for the most complex of cases.
Within our Buy-to-Let mortgage for HMO properties, investors will fall into either tier 2, 3, or 4. If you’re HMO property has 6 or fewer beds, you’ll sit in the tier 2 category. Tier 3 mortgages are offered to those investing in properties with up to 12 beds. Beyond this, you’ll likely sit within our tier 4 range.
Substantial HMO investments, with 7 or more rooms, may require a commercial valuation. Your assigned underwriter will break down these details and guide you on what’s needed.
If you rent out a property as a HMO in England or Wales, you must check in with your council to see if a licence is required. Separate local authorities will have different rules on where licences are needed.
If you’re renting out a large HMO however, you must have a license, regardless of where the property is based. Your local authority will guide you on the licensing application process, and guidance can be found on the government’s website.
Our buy-to-let mortgages for HMO properties may require evidence of a local authority licence, or hold a condition for a license to apply following a purchase.
For HMO property investors, an Article 4 Direction may catch them out here. Generally, changing a single dwelling house (use class C3) to a small HMO shared by up to six unrelated residents (use class C4) does not require planning permission, whereas larger HMOs will.
But, an Article 4 Direction can be made by a local planning authority to remove certain permitted development rights in all, or part of, its area. In short, this may result in planning permission being required for certain types of developments that would not otherwise require an application for planning permission.
It’s important to get your license situation sorted as soon as possible, as landlords could face unlimited fines for renting out an unlicensed HMO.
The type of properties our buy-to-let HMO mortgages are used for can be occupied by a wide range of tenants. Typically though, HMOs tend to be popular with students or young professionals looking for lower cost accommodation.
They can also be utilised by holiday seekers, certain state benefit claimants, or families. Regardless of who you’re renting to, you need to focus on your requirements. Your HMO property, especially if it’s large, will need to meet certain standards and obligations. This is where the licensing rules will come into play.
As a specialist lender, we can accommodate several large-scale investment strategies. On top of HMOs, this includes multi-unit freehold blocks (MUFB) of up to 30 units, large portfolios of properties up to £10m, and multiple properties on one loan.
We pride ourselves on being a flexible lender. All our products are available to first time investors, along with seasoned portfolio owners. But, inexperienced landlords, who have been in the market for less than a year, will be limited to our tier 2 – 4 mortgages.
