Houses in Multiple Occupation
HMO Finance
HMOs offer some of the strongest yields in UK property — but they need specialist funding. Whether you're buying an existing HMO, converting a property, or refurbishing to increase room count, we arrange bridging finance from lenders who understand the HMO market.
£200k–£100m+
Loan Size
12 to 24 months
Typical Term
some lenders go to 36 months
Up to 75% LTV
Typical LTV
Key Features
What We Offer
All HMO types funded
From small shared houses to large-scale purpose-built HMOs. Licensed and unlicensed properties considered.
Purchase and conversion funding
Buy an existing HMO or convert a standard residential or commercial property into one.
Bridging to HMO mortgage
Short-term bridge while you convert and license the property, then refinance onto a specialist HMO mortgage.
Refurbishment costs included
Facilities can include build costs for fire safety, en-suite bathrooms, and room conversions.
Experienced HMO lenders
We work with lenders who understand HMO valuations, licensing requirements, and rental yields.
Article 4 areas considered
Properties in Article 4 direction areas where planning permission is needed for HMO use.
Ideal For
Common Scenarios
Purchase an Existing HMO
Acquiring a property already operating as an HMO. Fast bridging to secure the deal before refinancing onto a BTL product.
Convert to HMO
Buying a standard house or commercial property and converting it into a multi-let HMO. Bridging covers purchase and works.
HMO Refurbishment
Upgrading an existing HMO — adding en-suites, fire safety, or increasing room count to boost yield.
Large-Scale HMO Development
Purpose-built HMO schemes or converting larger buildings into multi-room lets. We structure funding for scale.
Typical Costs
What You'll Pay
Every deal is different, but here's what to budget for on a typical HMO facility. Use our calculator to estimate total costs for your specific deal.
Interest Rate
Priced case by case, rolled up — no monthly payments.
Arrangement Fee
1–2% of the gross loan. Can be added to the facility or paid on completion.
Valuation Fee
Nil to about £100 for a desktop valuation and up to about £2,000 for a full one, plus VAT, on a loan of about £200k, depending on the property, using HMO-specific valuation methodology.
Legal Fees
Your solicitor + lender's solicitor. Budget about £1,500–£2,000 plus VAT for each side on a loan of about £200k (more on larger or complex loans).
Monitoring Surveyor
£300–£500 per inspection for staged drawdowns on conversion works.
HMO Licensing
£500–£1,500 local authority fee (separate from the loan — paid directly to the council).
Our Fee
Our fee is generally 1% of the gross loan, paid on completion.
How It Works
From Purchase to Letting
Share the Deal
Tell us about the property — whether it's an existing HMO you're acquiring, or a house you're converting. We need the purchase price, planned room count, estimated works costs, and your target rental income. If it's in an Article 4 area, let us know — it affects which lenders are suitable.
Purchase and Convert
We arrange a bridging facility covering the purchase and any conversion works. If works are needed, build costs are typically released in stages. During this period you'll arrange HMO licensing with the local authority and complete fire safety compliance.
Let and Refinance
Once the HMO is licensed, tenanted, and producing income, you refinance onto a specialist HMO mortgage — typically at the uplifted value based on the rental income. This often allows you to extract your original capital and retain the asset.
Who Is This For
Typical HMO Borrowers
First-Time HMO Investors
Stepping up from standard BTL to higher-yielding HMOs. Bridging funds the purchase and conversion while you obtain the licence and tenant the property.
Portfolio HMO Operators
Experienced landlords adding to an existing HMO portfolio. Speed of acquisition matters when good stock is scarce — bridging lets you move fast.
Commercial-to-HMO Converters
Converting offices, retail units, or other commercial property into multi-let residential. Bridging covers purchase and works before you refinance onto an HMO mortgage.
Auction Buyers
HMOs frequently come to auction. Bridging can provide the speed to complete within the completion deadline, typically 20 business days, then convert and refinance.
Common Questions
HMO Finance FAQ
Do I need an HMO licence before I can get bridging finance?
What is an Article 4 direction and how does it affect HMO finance?
What yields should I expect from an HMO?
Can I include conversion costs in the bridging loan?
What fire safety works will I need for an HMO?
How many rooms make it worth converting to an HMO?
Can I refinance an HMO back onto a standard BTL mortgage?
Do HMO lenders care about the council licensing regime?
Is an HMO licence the same as planning permission for an HMO?
No. They are two separate legal tests run by different parts of the council, and a property can pass one and fail the other.
Licensing, under the Housing Act 2004, is about housing standards and management: mandatory licensing covers an HMO with five or more people forming two or more households, and councils can add their own additional or selective schemes.
Planning is about whether the use is lawful. A small HMO (three to six unrelated people) is use class C4, and turning a house into one is usually permitted development unless an Article 4 direction removes that right; a large HMO (more than six people) is sui generis and needs planning permission in every area.
A licence does not prove the use is lawful in planning terms, so lenders and valuers check both. Have the licence (or the council’s register entry) and the planning evidence (a permission, the permitted-development basis, or a lawful development certificate) ready at enquiry. For the valuation side, see how lenders value a large HMO.
Our property is let to a housing provider. Does it still need an HMO licence or planning permission?
Possibly not a licence, but don’t assume either exemption. A building managed or controlled by a council or a non-profit registered provider of social housing is not treated as an HMO for licensing (Housing Act 2004, Schedule 14). The test is who manages or controls the building, not simply who the tenant is.
“Exempt accommodation” is something else again: it is a housing benefit category for some supported housing, and it does not mean exempt from HMO licensing or planning.
Planning is a separate question the letting doesn’t answer; the number of residents, and whether care is provided, decide the use class, so check with the council or a planning consultant.
The lender’s solicitor and valuer will want the lease or management agreement, the provider’s entry on the Regulator of Social Housing’s list of registered providers, written confirmation from the council’s HMO licensing team, and the planning position (a lawful development certificate is the strongest evidence). Saying the property is “exempt” won’t be enough on its own.
An old planning application on the property was refused. Will that stop the loan?
Not on its own, but the lender will see it, so disclose it at enquiry and be ready to show that the property’s current use is lawful.
A refused application stays on the council’s public planning register, and the lender’s solicitor and valuer will find it. A refusal for a different scheme doesn’t make the existing use unlawful; a refusal for the use the property is already being put to is a red flag, and the lender will ask whether that use is lawful, immune from enforcement or at risk.
Bring the decision notice and its reasons, any appeal decision, any enforcement notice (or confirmation there is none), and the planning permission or a lawful development certificate for the current use. Settle this before you pay for a valuation, or you can end up paying for a report the lender won’t rely on (can a valuation be reused?).
The licensing and planning answers above cover England only; Wales and Scotland run their own HMO regimes. Licensing and planning rules differ by council and change over time. Check with the council or a planning consultant before you rely on any exemption.
Worked example: three HMOs, three pieces of paper
Illustrative example. The figures are invented to show the mechanics. This is not a real deal, not legal advice and not an offer of terms.
An SPV refinances three HMOs it already owns with a £2.5m first-charge bridge. The combined value in the application is £3.6m, so the loan is 69% of value.
- Property A: a 6-bed C4 HMO in an Article 4 area. Licensed, with planning permission for the C4 use. The solicitor needs nothing further.
- Property B: an 8-bed HMO (sui generis). Licensed, and the council’s register shows a refusal from some years ago for a rear extension. The licence doesn’t prove the 8-bed use is lawful, so the solicitor asks for the planning permission or a lawful development certificate. The old refusal was for a different scheme, but the SPV still produces the decision notice to show it.
- Property C: a 6-bed house leased to a non-profit registered provider, which manages it. Not licensed. The solicitor asks for the lease, the management agreement and the provider’s entry on the register, and the lender asks what the planning use is.
With the evidence in hand: the SPV produces B’s permission and C’s documents within the week, and the loan proceeds at £2.5m.
Without planning evidence for B: the lender may value B as a single house rather than an HMO. The combined value falls to £3.3m and the same £2.5m loan becomes 76% of value. To get back to 70% (the target in this example, not a product limit) the SPV needs about £190k more equity, or a smaller loan.
The lesson: licence, planning permission and planning history are three separate pieces of paper. Have all three for every HMO before the valuation is booked.
Last reviewed: 18 October 2026
Real Results
Deals We've Structured
Ready to Discuss Your Deal?
Get an indicative quote or arrange a call with a specialist. If we can respond immediately we will, otherwise we'll call you back the same working day, often within a couple of hours.