Student Lets and HMO Mortgages

Student Let HMO (House of Multiple Occupation) Mortgages are becoming a more popular choice for many of our clients given the recent tax changes made by the Chancellor in recent budgets to buy to let income mortgage interest relief.

The main reason for this, a lot of clients tell us, is that generally landlords letting a property on a room by room basis individually to students or sharers creates a higher yield than if the property was let to a single family or sharers on a single tenancy agreement. The increased rental income, we are told, then assists landlords reduce the impact of the new tax buy to let changes.

Local Authorities across the UK also have different licensing rules regarding Student Lets or Houses of Multiple Occupation (HMO’s). This is set based on the number of sharers in the property and/or the number of storeys in the building. For instance, in some areas, a standard property let to more than 2 sharers individually would require an HMO license from the Local Authority.

Typically, customers contacting us to arrange a Student Let Mortgage or HMO Mortgage often tell us they:

• Have been previously declined by their existing Bank or Lender as they are not comfortable with the property being let on individual tenancy agreements or the fact that the property requires a license from the Local Authority;
• First time buyers wishing to purchase their first property as a buy to let;
• Clients aged over 60 wishing to purchase a student let or HMO property using cash from their pension;
• Remortgaging an existing student let/HMO property to release cash for home improvements, debt consolidation, school fees and other expenses;
• They live or work overseas – and are classed as ex-pats;
• They have been declined on credit score or for adverse credit by a lender; and
• Extending the length of their student let/HMO mortgage which may soon be coming to an end.

 At RockHopper we can look to assist clients looking to arrange a student let or HMO mortgage with as little as 15% deposit or equity in the property, however typically the deposit requirement is 25% to 30% of the property value.

We appreciate everyone’s particular situation is unique, which is why we look at every enquiry on a case by case basis.

If you would like to see whether we can help you raise a mortgage on a student let or HMO property, do get in touch for a free no obligation quotation.