What is an HMO?
A House in Multiple Occupation (HMO) is a property rented to 3 or more tenants from 2 or more separate households, who share facilities like bathrooms or kitchens. Student houses, professional house shares, and bedsit-style properties often qualify as HMOs.
Why Invest in HMOs?
HMOs can generate significantly higher yields than standard buy-to-let properties because you're renting by the room rather than the whole property.
Example: A 4-bed house might rent for £1,200/month as a whole property. As an HMO with 4 rooms at £500 each, it generates £2,000/month - a 67% increase in rental income.
HMO Licensing Requirements
Mandatory licensing applies to HMOs with 5 or more tenants from 2+ households. However, many councils have introduced additional licensing schemes covering smaller HMOs. Check with your local council.
HMO licence requirements typically include:
- Minimum room sizes (6.51sqm for single, 10.22sqm for double)
- Adequate kitchen and bathroom facilities
- Fire safety measures (doors, alarms, extinguishers)
- Annual gas safety certificate
- Electrical safety certificate
- Fit and proper person test for landlord
HMO Mortgage Requirements
Not all lenders offer HMO mortgages. Those that do have specific criteria.
Typical HMO mortgage criteria:
- 25-30% deposit minimum
- Experience as a landlord often required
- Maximum number of bedrooms (often 6-8)
- Property must meet HMO licensing standards
- Rental calculations based on HMO income potential
Converting a property to an HMO without proper planning permission and licensing is illegal and can result in significant fines. Always check requirements before purchasing.
Article 4 Directions
Some areas have Article 4 Directions removing permitted development rights for HMO conversions. This means you need planning permission to convert a property to an HMO, and permission may be refused to limit HMO concentrations in the area.
Research the local area thoroughly before buying. Check HMO saturation levels, Article 4 status, and licensing requirements with the local council. Some areas actively discourage new HMOs.