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Mortgages for HMO’s

With the recent changes in the way in which investors in Buy To Let properties are currently viewed by HMRC, and in the future, investors have to look very carefully at the manner in which they purchase a property either in their own name or via a limited company (SPV) and which type of property is likely to produce a strong income stream now and in the foreseeable future.

Clients looking to purchase an investment property should certainly seek advice from an accountant or tax specialist, in order to make an informed decision on the best way forward with their proposed purchase.

We have certainly seen a great deal more interest in HMO properties because of the attractive level of income that they can produce, and we have also seen lenders being far more active in offering mortgages for HMO properties.

In the current market we can achieve mortgages up to 80% LTV, subject to criteria and the rental stress test, which has become a little more challenging in this changing market.

We are also pleased to see that some of our lenders will consider an element of bad credit, so we will require sight of your credit file in order to see how we can help you and what terms may apply.

If you do not have access to your credit file you can access then with a one off payment of £2 by a debit card, or you can opt for a one month free trial from either

www.equifax.co.uk or www.experian.co.uk

As there are new rules that will affect clients who have, or wish to purchase an HMO, we have set out the guide lines for you which were up dated on 05/12/2018.

Please see below the link to the Government Website offering you more information regarding how HMO properties are viewed by HMRC


Enquiry Form

If you wish to proceed with a mortgage enquiry please click the button below to go to our enquiry form.

HMO Overview

A house in multiple occupation (HMO) is a property rented out by at least three people who are not from one household, but share facilities like the bathroom and kitchen, it is sometimes called house sharing.

If you want to rent out your property as an HMO in England or Wales, you must contact your local Council to check to see if you require a licence to achieve this.

You must have a licence if you are renting out a large HMO in England or Wales.  Your property is defined as a large HMO if all of the following apply:

  • It is rented to five or more people who form more than one household
  • Some, or all, of the tenants share toilet, bathroom or kitchen facilities
  • At least one tenant pays rent (or their employer pays it for them)
  • Even if the property is smaller and rented to fewer people, you may still need a licence depending on the area (check with your Local Council)


  • A licence is valid for 5 years
  • You must review your licence before it runs out
  • You need a separate licence for each HMO that you own


You must make sure:

  • The house is suitable for the number of occupants (this depends on its size and the facilities)
  • The manager of the house, you or an agent is considered to be “fit and property” for example they have no criminal record, or breach of landlord laws or code of practice.

You must also

  • Send the council an up dated gas safety certificate every year
  • Install and maintain smoke alarms
  • Provide safety certificates for all appliances when requested
  • The Council may add other conditions to your licence, for example improving the standard of your facilities, they will advise you when you apply.
  • If you disagree with any of the conditions the Council sets, you can appeal to the First Tier Tribunal.
  • You should apply for the licence yourself, but you can use a managing agent to do this for you.


Check if your home is overcrowded by law

Find out if your home is illegally overcrowded, also known as statutory overcrowding.

  1. Room standard

The room standard looks at the number and sex of people who have to sleep in the same room.

Any room you can sleep in counts, not just bedrooms. Living room, dining rooms and studies count as rooms you can sleep in.

Your home is overcrowded by law if:

  • 2 people of a different sex have to sleep in the same room
  • they are aged 10 or over

The rule doesn’t apply to couples who share a room. Children under 10 aren’t counted.


A couple with two boys and a girl all aged under 10 living in a one-bedroom flat with a living room would not count as overcrowded under the room standard.

  1. Space standard

This method is called the space standard. There are two ways to work out if a home is overcrowded under the law using this method.

First count the number of people:

  • anyone aged 10 or over counts as 1 person
  • children aged 1 to 9 count as 0.5
  • children under 1 year old don’t count

Next, count the number of rooms or measure the floor space of each room.

Don’t count any room that is:

  • under 50 square feet or 4.6 square metres
  • not a bedroom or living room

Check the tables below to see if your home counts as overcrowded under the law under the space standard.

If you get different results from each table, use the lowest figure of maximum number of people allowed.

Number of rooms

Number of roomsMaximum number of people allowed

Floor space of each room

Room’s floor space in square feetRoom’s floor space in square metresMaximum number of people allowed
50 – 694.6 – 6.40.5
70 – 896.5 – 8.31
90 – 1098.4 – 10.11.5

Minimum bedroom sizes for Houses in multiple occupation (HMO)

Some houses in multiple occupation (HMO) must be licensed by the council.

If your landlord applied for a HMO licence on or after 1 October 2018 or has renewed it since, bedroom sizes must be at least:

  • 6.51 square metres for an adult
  • 10.22 square metres for two adults
  • 4.64 square metres for a child under 10 years old

Some councils may set higher standards for bedroom sizes.

If a room is used as bedroom and doesn’t meet the size requirement, the council may allow your landlord up to 18 months to make the room larger or move you to a different bedroom.

The council can prosecute or fine your landlord if a bedroom is smaller than standards allow.

If your home is overcrowded

If your home is overcrowded according to either the room standard or space standard, you could:

  • count as homeless by law
  • have additional priority if you apply for council housing

Find out what your options are if your home is overcrowded.

Still need advice?


The overall cost for comparison is 5% APR. The actual rate available will depend on your circumstances. Ask for a personalised illustration.