HMO Lending

HMO stands for House of Multiple Occupation - a property that is occupied by 3 people or more who are not from the same household. Often properties that are / are being converted into HMOs will need a license from the council. An HMO mortgage is a mortgage specifically for this type of property. It allows a landlord to rent the property out on multiple tenancies within the same property which is often not allowed under usual buy-to-let mortgage applications.
There are a number of lenders who specialise and offer HMO lending as part of their product offering.

HMO ownership:

Unlike a standard mortgage, an HMO can be owned in a number of different ways. HMO properties can be purchased in your own name but also in a company name. How a property is held can impact the tax payable on the income received through the rental income that is generated on the property. It is important to seek the advice of an accountant in this regard to ensure that you are fully aware of the tax implications  and in choosing the relevant structure for your property ownership. 

We can put you in touch with an accountant who will be able to help you make a decision on this or the possible implications that are worthy of consideration. 

Stamp duty:

There are also potential implications with regards to the stamp duty you may pay on your purchase depending on what vehicle / way you purchase your property. 

Capital Gains Tax:

If you sell your property at a profit later down the line,  you will be liable for tax under Capital Gains Tax regime. This is also worthy of consideration when weighing up the purchase of a residential investment property.

Any queries on this please contact us on 0800 -7723-180 or email us on

HMO rates:

Slightly higher interest rates may be applicable on HMO mortgages than standard buy-to-let mortgages. At times these may be even higher than expected due to the nature of the property you may be purchasing or other factors. 


Usually a larger deposit is required as a minimum deposit in comparison to standard mortgages. Some standard mortgages may only require a deposit of 10% however on HMO mortgage deposits can be typically at least 25% of the purchase price. 

Rental income:

The amount you can borrow is often (but not always) reliant on the rental income that the property can generate. The majority of lenders will want to ensure that the rental income that is generated from the property is sufficient to service the loan and allow surplus in the event of void periods, rises in interest rate, taxation and other costs involved in owning a property that is rented out. 


Some lenders want to see that the borrower has experience of being a landlord previously. However depending on your experience we can help. 

Please call or email us at 0800-7723-180 or email us on if you have any questions.

Associated costs:

It is important to remember that there are a number of costs associated with purchasing a property. These can include but are not limited to the following: 

  1. Repairs and works at the property 
  2. Estate agency fees 
  3. Rental voids – If you can’t get a tenant for your property it is still your responsibility to service the mortgage 
  4. Service charge 
  5. Utility bills and council tax when the property is unoccupied – depending on length of time 
  6. Estate agency fees on sale and purchase  
  7. Tenancy fees / inventory fees 
  8. Solicitor’s fees on purchase and sale 
  9. Solicitor’s fees potentially if you have to evict a tenant 

Budget template:

If you would like a template to help you budget your costs please email us here at Subject HMO Budget planner

It is important to remember that property values can go down and you may not receive back all the money you have invested in the property on sale.