The HMO sector has seen a signifcant boost in interest in the past couple of years.
Changes to buy-to-let taxation has affected potential profits for landlords. Lenders are using stricter rental calculations to determine affordability.
Some landlords have turned to HMOs for greater income yield and portfolio growth.
TBMC's experts place these cases every day so here are our top tips for sourcing HMO mortgages:
Check the number of ASTs your client has in place with their HMO tenants. Some lenders accept multiple ASTs and others will only accept one.
Most lenders will only expect to see one kitchen and one living room in a HMO. If the property has more you may need to source specialist lenders.
3. Tenant Type
Your client's HMO might have a specific tenant type. Check criteria for DSS tenants, students and vulnerable tenants.
4. No. of rooms
HMO lenders have criteria on how many bedrooms they will accept in the property. TBMC works with lenders ranging from a maximum of 4 bedrooms to those with no limit at all.
5. HMO licensing
Check your client's HMO property is correctly lisensed. Properties with 5 or more bedrooms, occupied by more than 1 household, who are sharing facilities will (as of October 2018) need to be a licensed with the local authority. Lenders will need the appropriate licences in place before completion.