Buy to Let, HMO and Multi Units

When it comes to property investing there are different types of properties and tenancies to consider.

These depend on your budget, your long-term strategy, your desired level of involvement and attitude to risk.

Buy to let - This is often a single house/flat let to a single-family unit under a single tenancy agreement and the tenants are usually responsible for all utility bills. This is a more hands off investment as the same tenant could potentially be in situ for many years. However, as the property generates a single rental payment the impacts of any non-payment of rent should be considered.

HMO – This type of property is described as a single property let to 3 or more unrelated parties. In practice, a HMO can have any number of bedrooms from 3 to 300 (or more). The landlord is normally responsible for all utility bills and maintaining the communal areas. As the property is let to multiple individuals the risk of non-payment of rent is somewhat mitigated. However, the running costs of the property need to be considered when calculating potential returns.

Multi-Unit – A ‘Multi-unit’ occurs when a single property is divided into two or more separate dwellings. For example, this could be a house converted into two flats or a whole block of flats. Each individual unit could then be let as a BTL or HMO as above. By the nature of the property being ‘multi-tenanted’ this would result in multiple income streams.

This is a complex area with varying criteria from multiple lenders, your property experience and background income will also have a bearing on selecting the right lender.