Student Lets and HMO Mortgages

Navigating the world of student lets and HMOs

Renting a property to multiple tenants can be a lucrative way of managing your portfolio but navigating the world of student lets and HMO mortgages can be tricky. We’ve put together some basic information to help you get started. The below is intended as a guide only s please always check with your local council for clarification on their enforceable regulations.

What is an HMO?

Defining what constitutes a House in Multiple Occupation, or HMO as they’re often referred to, is difficult as councils operate using different criteria. According to the gov.uk website your property is an HMO if you have both more than three tenants living there forming more than one household, and they share toilet, bathroom, and kitchen facilities. A household is defined as either a single person or members of the same family living together - this includes couples who are married or living together regardless of gender. An example of an HMO meeting this criteria is five tenants living together in the property forming three households and sharing the same kitchen, bathroom, and toilet facilities.

Local councils have the power to designate specific areas as subject to additional HMO licensing. This means that, although the above information is useful as a starting point, you will always need to check with your local authority as to whether your property meets their specific HMO criteria.

What happens if I have an HMO?

If your property falls under the criteria set out by your local council you will likely need a license and a specialist mortgage. The type of licence you need depends on the type of HMO you’re operating.

You need a Mandatory License if the property is rented to five or more people forming more than one household, some or all of the tenants share amenities (bathroom, kitchen, or toilet facilities), and at least one tenant pays rent (or their employer pays on their behalf). These conditions apply regardless of the size and structure of the property and are typically called large HMOs.

Whether you need an Additional or Selective License is determined by your local authority and usually (although not always) applies to small HMOs. An example of a small HMO would be a property housing four tenants that form two separate households with shared bathroom, kitchen, and toilet facilities. It’s always best to check with your local council whether you need an additional or selective license as renting out an unlicensed HMO property carries an unlimited fine.

In addition to the license, you may also need specific HMO planning permission.

What about the mortgage?

If your property meets the HMO criteria, set either by the government or your local authority, you will need a specialist HMO Mortgage. An increasing number of lenders are now offering this type of mortgage, which has helped bring interest rates to a more competitive level. There are a number of questions your Vincent Burch Mortgage Adviser will ask you to ensure they fully understand your situation. Once they have all the information required they will suggest suitable lenders and products.

It’s important to note that normal buy to let mortgages do not typically allow for the letting of properties under multiple agreements as set out in their terms and conditions.

What if my student let isn’t an HMO?

If your student let does not fall within the criteria of an HMO set out by your local council you can normally use a standard by to let mortgage. Your Vincent Burch Mortgage Adviser will ensure they fully understand your property and tenant situation before recommending the most suitable lenders and products for you.

We’re here for you

You don’t need to navigate the world of student let and HMO mortgages alone, our experienced and trusted advisors are just a call away. The Vincent Burch team has extensive experience in the field of HMO and student let mortgages and can answer any queries quickly, efficiently, and always with your best interests at heart. Give us a call on 01603 340 644 or send us an email for a free quote.