An HMO mortgage is specialist buy-to-let lending secured on a house in multiple occupation — a property let by the room to tenants from different households, sharing facilities such as kitchens or bathrooms. Because the income, the management and the regulation all differ from a single-let property, lenders treat HMOs as their own category, with their own products and criteria.
This page is for landlords buying, refinancing or converting HMO property in London and across the UK. We arrange HMO mortgages in personal names and through limited companies, working across a panel of 135+ lenders — including the specialist lenders who do most of this market and deal only through brokers.
Key facts
- What it is: buy-to-let lending secured on a property let by the room to tenants from different households, with shared facilities.
- Deposit: most lenders look for around 25%. A small number lend to 80% loan-to-value, though those products are priced accordingly; pricing improves at the common break points around 75%, 65% and 50% loan-to-value.
- Rates and fees: HMO products are typically priced slightly higher than a standard buy-to-let, and arrangement fees are often charged as a percentage — commonly 1% to 2%.
- Affordability: assessed on rental cover — the lender stress-tests the room-by-room rental income against the interest. You can sense-check your own numbers with our BTL rental cover (ICR) calculator.
- Licensing: a property housing five or more tenants from different households will usually need a mandatory HMO licence, and many councils — particularly London boroughs — run additional or selective schemes that catch smaller HMOs too. Lenders expect the right licence to be in place.
- Experience: many lenders prefer some landlord experience first — commonly six to twelve months — before an HMO.
- Regulation: the Financial Conduct Authority does not regulate most buy-to-let mortgages.
How lenders assess an HMO
An HMO typically produces a higher rental yield than a single let, because each room earns its own rent. Lenders price for what comes with that: tenancies tend to be shorter, turnover and management are heavier, and the valuation is more in-depth — covering the property's sustainability as an HMO, rental likelihood, the area and the tenant types — which is why valuation fees usually run a little higher.
Size shapes the lender pool. A property with more than eight lettable rooms — six with some lenders — is treated as a large HMO, and some lenders treat blocks of more than ten as commercial. Room sizes matter too: a room smaller than 6.51 square metres — the mandatory HMO licensing minimum for a single adult in England — cannot be used as sleeping accommodation, and lenders look hard at undersized rooms.
Not every buy-to-let lender offers HMO products, but the lenders who do will also write standard buy-to-let — so the practical question is rarely "can this be financed?" and usually "which lender fits this property, this licence position and this borrower?" That is a criteria-first question, and it is where we start.
Licensing and the local council
Confirm the licence position before you commit. The legal position varies by area: a property able to house five or more tenants from different households will, in most cases, fall within mandatory licensing, and many councils operate additional or selective schemes that extend licensing to smaller shared houses and, in designated areas, ordinary lets. Where a licence is required you cannot let the property without one — and a lender will not advance the mortgage without it.
Licensing fees vary by location, as do the conditions attached. You will also need to meet fire safety regulations. Check with the local authority early; it is far cheaper to know before works begin than after.
Holding an HMO in a limited company
Most landlords now buy HMOs through a limited company. The driver is tax: a company can offset mortgage interest against profit, and pays corporation tax at 19–25% depending on profits, where a higher or additional rate taxpayer holding personally faces marginal rates of 40% or 45%. The company needs to be UK registered with the correct SIC codes — the property codes beginning 68 — and in good standing.
The structure has its own mechanics and trade-offs, covered in detail on our limited company HMO mortgage and SPV mortgage pages. For specialist tax advice, please refer to an accountant or tax specialist.
Buying, converting or moving fast
If you are converting an existing rental into a shared house, the mortgage has to change with it — see changing a buy-to-let to an HMO mortgage; the remortgage typically runs eight to twelve weeks. If the property needs work before it can be let — or you are buying at auction — an HMO bridging loan can fund the purchase and the works, with the HMO mortgage as the refinance exit once the property is licensed and lettable.
Why a specialist broker helps
Almost all HMO lenders are broker-only, so the market is not one you can approach directly with much success. We arrange HMO finance across 135+ lenders, match the case to the lenders whose criteria genuinely fit — size, licence position, company structure, experience — and manage the application through valuation, offer and legals to completion.
The process
- Conversation. You tell us the property, the room count, the licence position and how you plan to hold it.
- Structure check. We confirm personal versus company ownership with your tax adviser's input, and whether any works or bridging are needed first.
- Lender match. We shortlist lenders whose criteria fit the property and your experience, criteria-first.
- Application. We package and submit the case, and manage the valuation and underwriting.
- Offer and completion. We see the loan through legals to completion.
FAQ
What is an HMO mortgage? Buy-to-let lending secured on a house in multiple occupation — a property let by the room to tenants from different households who share facilities. Lenders treat HMOs as a distinct category, with their own products, criteria and pricing.
How much deposit do I need for an HMO mortgage? Most lenders look for around 25%. A small number will lend to 80% loan-to-value, though those products carry noticeably higher pricing, and rates improve at the common break points around 75%, 65% and 50% loan-to-value.
Do I need a licence before I can get an HMO mortgage? Where the property needs an HMO licence — which usually includes any property housing five or more tenants from different households, and more properties still under local schemes — lenders expect it to be in place. Without the right licence in an area that requires one, a lender will not advance the mortgage.
Should I hold an HMO in a limited company? Many landlords do, because a company can offset mortgage interest against profit and pays corporation tax at 19–25% depending on profits, rather than personal marginal rates of 40% or 45%. It is not automatically the right answer — take advice from an accountant or tax specialist before you commit.
Are HMO mortgage rates higher than buy-to-let rates? Typically slightly higher, reflecting the extra risk lenders attach to room-by-room letting, and arrangement fees are often charged as a percentage — commonly 1% to 2%. The stronger room-by-room income frequently outweighs the higher cost, but the numbers need checking case by case.
Talk to an adviser
Tell us about the property, the room count and how you plan to hold it, and we'll set out which lenders are likely to fund it and on what basis. Call 020 7126 8574 or request a call back — we aim to reply within one working day.
Your property may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it. The Financial Conduct Authority does not regulate most buy-to-let mortgages.
Propertyze is a trading style of City Finance Brokers Ltd, authorised and regulated by the Financial Conduct Authority, FCA No. 766295.
Related buy-to-let finance
Buy-to-let mortgages · Limited company HMO mortgages · HMO bridging loans · Changing buy-to-let to HMO · BTL rental cover (ICR) calculator