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Mortgage lenders enhance their offering for HMO landlords

With an average yield of 9.2%, houses in multiple occupation (HMOs) have been increasingly popular with landlords looking to diversify their portfolio and maximise their returns. Lenders OneSavings Bank and Foundation Home Loans have both revamped their mortgage offers to assist landlords with more complex properties. OneSavings bank had recently introduced a new approach to buy-to-let and HMO valuations. Now, the specialist lender has announced changes to its HMO proposition streamlining its application criteria.

Each of OneSavings Bank’s mortgage brands now focuses on a different size HMO by the number of bedrooms.  Precise Mortgages now accepts applications with up to six bedrooms. For Kent Reliance for Intermediaries, the top number of bedrooms is eight. InterBay Commercial will accept any size HMO with no limit on the number of bedrooms. Alan Cleary, group managing director of mortgages, OneSavings Bank, said: “Ultimately for brokers, these changes ensure that their HMO cases will be directed to the specialist teams that are best placed to handle them, regardless of size or complexity.

"Whether the cases involve investment valuations, large loan sizes or even complex company structures, we have the expertise within the OneSavings Bank group to consider every case.” Foundation Home Loans relaunches range Foundation Home Loans has relaunched its product range for HMO mortgages. This includes large HMO/multi-unit block range, short-term let properties, limited company and individual products. It now offers new deals, reduced product fees and the extension of all deal end dates.

The lender has halved its two-year fixed fees to 1%. It has also launched a five-year fix at 80% loan-to-value at 4.24% with a fee of £1,995 for borrowers with a near-perfect credit record. Portfolio landlords can also access ‘low loans’, with the minimum loan size reduced from £50,000 to £30,000. ‘End’ dates for products have also increased, with two-year deals now ending in July 2022. Some five-year deals now extend to July 2025. Adding to the benefits of an HMO HMO properties can offer better yields and reduce void periods for landlords.

They have seen a surge in interest recently from landlords looking to diversify their portfolios. As the UK housing market continues to change, HMOs can be a way for landlords to increase their profits, if they choose the right investment. Tenant demand is growing, and renters' needs are also changing. While HMOs might once have had negative, "bed-sit" imagery attached, they are now a desirable option for tenants. They are now subject to greater regulation, and as such, living standards are higher than ever.

Particularly where HMOs are designed for the purpose, they can offer an ideal solution for the tenant, and a reliable income for the landlord. Now, it seems landlords can expect the mortgage market for HMOs to become increasingly competitive, too. At BuyAssociation, we have a number of HMO investment opportunities available. Get in touch with us directly, or sign up for free for more information. Source: Mortgage lenders enhance their offering for HMO landlords


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