The housing acts require certain types of HMOs to be licensed by the local authority. This is typically larger properties with multiple tenants that potentially present higher risk.

Mandatory licensing applies to properties:

• with at least three stories,
• with five or more occupants making up at least two households.

To obtain a licence you must be a “fit and proper person” and your track record as a landlord will be considered when applying.

Local councils also have the authority to set down “additional licensing” criteria. These additional licences allow other types of HMO to be licensed. For example, HMOs in a certain geographical area have been shown to have a greater fire risk.

If you are looking to operate an HMO, it’s important to check with your local council whether a licence is required. Failing to obtain a licence where necessary is a criminal offence and can result in fines of up to £20,000 in England and Wales.

For a house qualify as an HMO, there needs to generally be three or more people living there and sharing the facilities. They can’t be related to each other and can’t own the property. The shared facilities would be the kitchen, bathroom, stairs and designated communal areas.

There are no rules stating exactly who can or can’t live in an HMO, but generally you would expect tenants to be adults, with any minors being accompanied by an adult as part of a family unit. An example of some typical tenants are students or professionals.

Many people ask if a landlord can live in an HMO. In the case of a standard Buy-to-Let mortgage, you are not allowed to use the property as your place of residence while renting it to others.

If you’re living at home and rent out spare rooms to non-family members, your house will generally become an HMO. If you take on more than two tenants, you will be required to meet the appropriate HMO standards for quality and safety.

There may come a time that you wish to consider raising some additional funds against an HMO property. This could be for a variety of reasons such as but not limited to:

• Home improvements
• Assist with the purchase of another property
• Debt consolidation

Typically, the first consideration will be to make an enquiry to your lender about a new . However, this is not always possible or indeed may not be the best solution at the time. Therefore, an alternative option may be a secured loan.

Secured loans are available for HMO properties, typically in the same way as with other Buy-to-Let secured loans. Secured loans can allow you to borrow more than a standard mortgage can provide.

However, rates and fees can, on many occasions, be higher than that of a standard mortgage. So, you’ll need to ensure you carry out your research wisely and take all options into consideration. We have access to HMO mortgage experts, so if you are looking to obtain some professional advice please get in touch.