HMO mortgage rates and brokers: what sets the price, and who is regulated

Why no rate is published here, or anywhere official

No public source sets a market rate for HMO lending. Pricing is quoted per case against the property, the licensing position, the rental cover and the borrower's experience, so any figure written on a page would be a number detached from the four things that decide it. This site publishes no rate or margin for that reason, and a site that does publish one is describing somebody else's case.

What the lender is actually pricing

The licensing position

Whether the property is licensable, whether the licence is in place and whether its conditions are met. An unlicensed property that should be licensed is a different risk from a licensed one, before anything about the borrower is considered.

Rental cover

How far the rent covers the interest at the lender's stressed rate. On an HMO this is assessed on the room-by-room let rather than a single tenancy, which is why an HMO and a comparable single let price differently on the same building.

The article 4 direction and planning position

Whether the local authority has removed permitted development rights for the change of use, which affects both the value and the exit.

Borrower experience

HMO lenders commonly distinguish first-time landlords, experienced landlords and portfolio landlords, and the distinction moves both the rate and whether a lender will look at the case at all.

Company or personal ownership

Whether the borrower is an individual or a limited company changes the lender set, and the lender set is what determines the range of rates available to you.

The regulatory line, because it changes what protections apply

Not all buy-to-let lending sits outside regulation. The Mortgage Credit Directive Order 2015 defines a consumer buy-to-let mortgage contract as "a buy-to-let mortgage contract which is not entered into by the borrower wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by the borrower" (legislation.gov.uk).

So the test is the borrower's purpose, not the property type. Lending taken out wholly or predominantly for a property business falls the other side of that line. The Order also allows a borrower to declare in writing that the contract is for business purposes, which creates a presumption to that effect unless the lender knows or suspects otherwise.

This is worth understanding before signing a business-purpose declaration, because it is the document that determines which regime the lending sits under and therefore what recourse exists if something goes wrong.

What a broker does, and what this site does not

A mortgage broker advises on and arranges lending, is regulated for the activities that require it, and is paid for that work. This site does neither: it is an introducer. We do not advise, arrange or recommend any mortgage, facility or firm, and we are not authorised or regulated by the Financial Conduct Authority. We introduce you to lenders and brokers by passing your details to them, and they deal with you directly. We may be paid a commission for that introduction by the firm we introduce you to, and it never changes what you are quoted.

That distinction is the reason this page names no firm and ranks nobody. What it can usefully do is tell you what to have ready, because the same five facts decide the answer wherever you take the case.

What to have ready before you speak to anyone

• The licensing status, and the licence itself if there is one. Gov.uk sets out when an HMO must be licensed (gov.uk).
• The room count and the actual rent per room, not the single-let equivalent.
• The planning position, including whether the area is subject to an article 4 direction.
• Your ownership structure, personal or company, and whether it is settled or still a decision.
• Your track record, honestly stated. Presenting a first HMO as portfolio experience wastes the fee and the time when it surfaces at underwriting.