Specialist Finance for Property Purchasing.
Loans for the more unique property situations.
Complex tenancies don’t have to mean complex loans.
Although it might feel like a minefield searching for finance when you’re planning to buy a property that’s intended to have multiple tenancy types, accessing funds doesn’t have to be that complex. There are dedicated property loans that are purpose built for the more unique rental situations - and we can be the key to you finding the right one.
Understanding Your Options
When it comes to specialist property finance, your options are based on the type of property and tenancies within. Properties with multiple tenancies normally fall into one of two categories: HMOs (Houses in Multiple Occupancy) or MUFBs (Multi-Unit Freehold Blocks). Although similar in many ways, there are some important differences.
Houses in Multiple Occupancy (HMOs)
HMOs have tenants from two or more households with their own spaces but have shared communal areas. Most need a license and must comply with regulations set by the local council.
Examples include:
A house divided into bedsits with shared facilities
A converted house which contains one or more flats which are not wholly self-contained
Hostel or refuge accommodation
Student accommodation
Accommodation for migrant or seasonal workers
Accommodation for professional tenants such as NHS workers
Multi-Unit Freehold Blocks (MUFBs)
MUFBs have multiple self-contained units in one building. They may have shared areas such as corridors, but each unit has their own entrance and facilities.
Examples include:
A purpose-built block of flats or apartments
A house converted into flats or apartments
A previously non-residential building such as a mill, converted into flats or apartments
Loans for HMOs and MUFBs
HMO loans and MUFB loans are both specialist types of buy to let mortgages, but the criteria and terms differ between the two - often to reflect the unique risks of each property type.
Unlike other buy to let loans, the rates and terms for HMO and MUFB loans are often stricter, and the application process a little more complicated.
Tailored to multi-tenancy risks
Stricter lending criteria
Higher interest rates
Licensing requirements (HMOs only)
Flexible repayment structures (such as interest only)
Specialist valuation to determine how much the property might make
You don’t have to figure it out alone. Have a specialist team by your side every step of the way.
With limited options for specialist property finance available from high street lenders, working with an experienced commercial finance broker with access to the specialist lending market can make all the difference.
Alongside our experienced broker team, we also have a dedicated Buy to Let team, Liz and Michelle, who are both specialists in residential investment mortgages, including HMOs and MUFBs, and have helped people secure funds even in the most complex scenarios.
HMO FAQs
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The deposit needed for an HMO or MUFB mortgage will vary between lenders and will be affected by a number of factors. Typically, lenders require a deposit of 20-40% of the property’s value, although some may ask for a higher amount, especially for more complex cases or if the property does not meet standard requirements.
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Yes, it is possible to get an HMO or MUFB mortgage as a first-time landlord, but your options may be more limited compared to those available to experienced landlords. You may be subject to stricter terms, such as higher deposit requirements and interest rates, as well as additional conditions, like providing a comprehensive business plan or proof of professional property management.
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Affordability calculations vary between lenders, but the amount you can borrow for an HMO or MUFB mortgage is typically based on the rental income the property is expected to generate.
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There is no minimum income requirement for an HMO or MUFB mortgage, however lenders will need to see evidence of income and affordability. Income can be from employment or self-employment, other rental properties, pension income, or other verifiable earnings.
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No, a license is not required to own a Multi-Unit Freehold Block (MUFB), unlike an HMO, which often requires specific licensing. However, it’s important to ensure that the property complies with local building regulations, fire safety standards, and other legal requirements.
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If the property is used for mixed purposes, such as a combination of commercial and residential spaces (e.g. a shop with flats above it), a commercial mortgage may be the most suitable option. Read more about commercial mortgages here.(link to commercial mortgage page)
Not sure if HMO or MUFB financing is right for you?
If you’re not sure that an HMO or MUFB mortgage is right for you, why not take a look at some of the other ways our team can help you.