A House in Multiple Occupation (HMO) is a property rented by several tenants who are not from the same household.
Each tenant typically has their own private room while sharing communal areas such as the kitchen, bathroom, or lounge.
An HMO mortgage in Leicester is a type of buy-to-let mortgage in Leicester designed for landlords who want to finance properties where tenants live independently but share facilities.
These properties are especially common in areas with strong tenant demand, such as student neighbourhoods or professional rental markets.
Owning an HMO can generate higher rental income than a standard buy-to-let, although it also comes with extra responsibilities and stricter lending criteria.
What Defines a HMO Property?
The definition of a HMO can vary depending on the local council, but in most cases, a property is classed as an HMO if:
- It is occupied by five or more people
- It has multiple tenancy agreements
- It includes five to seven lettable rooms
Large HMOs often require a licence from the local authority in Leicester.
The licence ensures that the property meets safety standards and that it is managed responsibly. Councils can also set additional conditions depending on the property type and size.
Who Should Consider a HMO Mortgage in Leicester?
An HMO mortgage in Leicester is usually best suited to experienced landlords who already own one or more rental properties.
Lenders will often ask for evidence of previous buy-to-let experience, as managing an HMO can be more demanding than a standard rental property.
Running a HMO requires handling multiple tenants, maintaining communal areas, and complying with specific housing regulations.
If you’re new to property investment, most lenders would recommend starting with a standard buy-to-let mortgage in Leicester before moving into HMO ownership.
How Does a HMO Mortgage in Leicester Work?
An HMO mortgage in Leicester works in a similar way to a standard buy-to-let mortgage. You’ll need to provide a deposit, meet affordability checks, and show that the expected rental income supports the loan.
The main differences relate to how lenders assess the property. They’ll want details about the number of tenants, layout, safety features, and whether an HMO licence is required.
Some lenders prefer individual tenancy agreements for each tenant, while others may accept a single agreement.
Rates and lending criteria can vary between lenders, particularly for larger HMOs or those held in a limited company.
Working with a specialist mortgage advisor in Leicester can help you find the most suitable lender for your circumstances.
Advantages and Considerations
A key advantage of an HMO is the potential for higher rental yields. Renting individual rooms often produces greater income than letting a whole property to one household.
There are challenges to balance against this. Managing multiple tenants means more administration, potentially higher turnover, and increased maintenance.
You’ll also need to comply with local HMO licensing rules, which can differ across areas of Leicester.
Owning an HMO Personally or Through a Limited Company
When applying for an HMO mortgage in Leicester, landlords can hold the property in their own name or through a limited company.
Using a company, often called a Special Purpose Vehicle (SPV), can offer tax advantages and separate personal and business finances.
Holding a property personally is also possible and can be simpler to manage, though the best choice depends on your wider financial plans.
Speaking with a mortgage advisor in Leicester can help you compare both routes and understand how they affect your investment.
Tenancy Agreements for HMOs
There’s no single correct way to structure tenancy agreements for HMOs. Some landlords prefer a joint agreement covering all tenants, while others issue individual agreements for each tenant.
The right approach can depend on the property type and how you manage tenancies.
Individual agreements can make it easier to replace one tenant without affecting others, while joint agreements can simplify administration for smaller setups.
Lenders have their own preferences, so discussing your plans early with your mortgage advisor in Leicester helps avoid any delays.
Speak to a Mortgage Advisor in Leicester
Arranging an HMO mortgage in Leicester requires specialist knowledge and careful planning.
Our mortgage advisors at Leicestermoneyman have experience working with both new and established landlords.
We can explain how buy-to-let mortgages in Leicester and HMO lending differ, outline the options available, and guide you through the full application process.
Whether you’re expanding your portfolio or purchasing your first HMO property, we’re here to help you find the right mortgage for your investment in Leicester.
Date Last Edited: November 4, 2025
