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Multiple Occupation (HMO) Buy-to-Let

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What is a House in Multiple Occupation (HMO)?

A property is a house in multiple occupation (HMO) if both of the following apply:

  • At least 3 tenants live there, forming more than 1 household.
  • They share toilet, bathroom or kitchen facilities with other tenants.

A property is a large HMO if both of the following apply:

  • At least 5 tenants live there, forming more than 1 household.
  • They share toilet, bathroom or kitchen facilities with other tenants.

A household is either a single person or members of the same family who live together. A family includes people who are:

  • Married or living together – including people in same-sex relationships.
  • Relatives or half-relatives, for example grandparents, aunts, uncles, siblings.
  • Step-parents and step-children.

Source: www.gov.uk (13/11/2018)

HMOs in Cambridge

HMOs are often occupied by students and young professionals and are arguably seen as the most profitable rental properties.

Cambridge is renowned as a student city with The University of Cambridge, Anglia Ruskin University, a number of Higher Education Colleges and Language Schools all being located in the city. Plus, with many young professionals being employed at Addenbrooke’s Hospital, the Science Park and at the education institutions previously mentioned, the demand for HMOs is always high.

Increasing demand for HMOs

The demand for HMOs across the UK as a whole is expected to grow steadily due to the highly competitive private rental market and changes to benefits. When thinking about purchasing or converting a property to an HMO there are risks involved as such properties can involve much more work than standard buy-to-let properties. The general reasons are as follows:

  1. Landlords will need a licence to let a property as an HMO from the local council if it has five or more unrelated people living there, or has two or more separate households living there.
  2. As tenants often share hallways, kitchens and bathrooms, HMOs tend to require more regular maintenance.
  3. The churn of tenants can often be higher than tenants living in standard buy-to-let properties as HMO tenants often progress through their career paths or studies and move up the property ladder.
  4. Since 1 October 2018 bedrooms must meet specific minimum size requirements.

Getting the right product for you

Mortgage lenders offer specific products for HMOs and some can lend on an unlimited number of rooms.
If you are thinking of purchasing an HMO, contact us and we would be happy to discuss your requirements.

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