Houses in Multiple Occupation (HMO)

In this section we cover:

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Definition

The Mortgage Works consider the following types of property as a HMO

  • A property occupied by five or more people
  • A property with five to seven lettable rooms in an area commensurate with multi letting

Properties subject to selective licencing are only classified as a HMO where at least one of the above conditions are met.

A property occupied by 4 people or fewer, even if licenced and sharing the characteristics of a HMO, is not eligible for HMO lending. The rental assessment will be based on a single family figure and a non HMO product should be selected.

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Valuation

  • For all HMO applications, including Further Advances, a Specialist Security valuation will be required, which is payable by the client. Press here to view our valuation fees.
  • For Further Advance and Remortgage applications, before a valuation can be carried out, we'll require a copy of the HMO licence. This needs to be attached to the case where the case Requirement has been generated. If this isn’t received within 15 working days, the application will be cancelled. 
  • Please note that the status of a property as an HMO will be determined by the valuer.
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Criteria

  • Minimum property value is £100,000
  • Maximum 75% LTV (See our table for maximum loan amount per property)
  • 175% Interest Cover Ratio (ICR) applies to all HMO applications, regardless of tax status.
  • We require 1 year HMO or 2 years buy to let experience for non portfolio landlords. No experience required for remortgage applications.
  • We won't accept Let to Buy applications
  • For valuation purposes, we'll assess rental cover on a multi-tenanted basis
  • All let properties will be subject to an:
    • Assured Shorthold Tenancy agreement
    • Short Assured Tenancy agreement
    • Private Residential Tenancy Agreement in Scotland (there is no maximum tenancy)
    • Occupation Contract in Wales (must be a minimum of 6 months, maximum of 36 months).
  • Single and multiple tenancy agreements accepted
  • A property must have no more than four habitable storeys and no more than one kitchen
  • Properties consisting of more than one self-contained unit under a single title are not acceptable
  • The property must offer a communal living room. We can consider a large open plan kitchen/living room if it is big enough to meet reasonable occupant needs as a communal room.

Please see our general criteria for full details.

Please note: the valuer will determine the status of a property as an HMO.

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