The Mortgage Works (TMW) has launched a new range of HMO (House of Multiple Occupation) mortgage criteria, including Limited Company deals, competitive loan-to-values of up to 75%, and a choice of fees. The revamp provides more flexibility for landlords looking to purchase, remortgage, or further advance HMO properties, an integral part of the UK rental market.
In this article, we’ll break down what an HMO property is, how HMO mortgages differ from standard buy-to-let loans, and explore the key details of The Mortgage Works’ latest HMO lending criteria.
What Is an HMO Property?
An HMO or House of Multiple Occupation is a house rented to five or more individuals who constitute two or more separate households and share facilities such as a bathroom or kitchen. HMOs are in demand in high-demanding areas such as city centres or university towns, offering landlords the potential for higher rental income than the traditional single-occupancy buy-to-let.
However, due to the increased management complexity and stricter regulation, including licensing, standards of rooms, and the need to meet safety requirements, HMO properties are subject to certain lending criteria.
What Is an HMO Mortgage?
An HMO mortgage is a buy-to-let mortgage for properties rented out to multiple tenants. Unlike a standard buy-to-let mortgage, where rent income is subjected to one household tenancy, HMO mortgages are subjected to a multi-tenanted basis, where the lenders consider the combined rent from multiple rooms.
Because HMOs are riskier and require more intensive management, the terms and mortgage rates for HMOs can be less favourable than standard buy-to-let products. Landlords will usually be asked to have existing property letting experience and ensure that the property meets local licensing and planning regulations.
The Mortgage Works HMO Mortgage Criteria 2025
The Mortgage Works, one of the UK’s top buy-to-let lenders and the buy-to-let arm of Nationwide Building Society, offers HMO mortgage products for individual and Limited Company landlords for purchase, remortgage, and further advance business.
Below are outlined the primary criteria the borrowers need to follow:
General Eligibility
- 75% LTV (loan-to-value) available (75% of the value of the property as a mortgage)
- Minimum property price: £100,000
- 175% Interest Cover Ratio (ICR) on all HMO applications
For Limited Company clients, subject to TMW’s Limited Company criteria
- Applications for Let to Buy are not accepted
- HMO Property Definition (According to The Mortgage Works)
TMW defines an HMO as:
A property occupied by five or more, or a five-to-seven lettable rooms property in a building in general use for multi-letting
Properties with between one and four tenants, whilst licensed as HMOs, cannot be considered on HMO products and will need to be assessed on regular buy-to-let terms.
Licensing and Regulatory Requirements
All large HMOs, houses of three or more storeys and five or more occupants, require a mandatory up-to-date HMO licence under the Housing Act 2004.
TMW policy requires:
- Remortgage or further advance: A valid licence must be in place, or confirmation that one has been applied for.
- Purchase or conversion: Evidence of application for the correct licence should be provided before completion.
- The property must meet current property standards, including minimum room sizes, even if the existing licence predates newer regulations.
If the licence provided is not suitable for the property’s intended use, TMW will decline the application.
Article 4 Direction and Planning
If the property is located within an Article 4 Direction area, where it is not allowed to convert single dwellings into HMOs without planning permission, The Mortgage Works will still lend, provided one of the below is submitted:
- Article 4 consent confirmation, or
- Certificate of Lawful Use
Proof of this needs to be provided ahead of valuation for all types of HMO mortgage applications.
Experience Requirements
For purchase applications (where the borrower is not a portfolio landlord):
The borrower should also have either two years’ experience of ownership and letting a buy-to-let property, or one year’s experience of ownership and letting an HMO property. Where the application is for remortgaging or portfolio landlord, experience does not have to be verified.
Tenancy Agreement Types Accepted
- Assured Shorthold Tenancy (AST)
- Short Assured Tenancy (Scotland)
- Private Residential Tenancy (Scotland – unlimited term)
- Occupation Contract (Wales – 6 to 36 months)
- Single and multiple tenancy agreements are accepted.
Property Design and Standards
- No more than four habitable floors
- Can have only one kitchen
- Has to have a communal living space (open-plan kitchen and living areas are permitted if big enough)
- Properties made up of several self-contained units under one heading are not suitable
Why Use The Mortgage Works for HMO Mortgages?
With competitive LTVs, variable fee structures, and Limited Company products, The Mortgage Works is an attractive choice for landlords branching out into the HMO market. Its remortgage terms and multi-tenancy rental calculation make it an attractive choice for both seasoned and new property investors.
Talk to a Buy-To-Let Mortgage Expert Today
The HMO market remains a good investment opportunity with higher returns and secure tenant demand in good areas. But structuring HMO lending and permits can be complex, demanding specialist lenders like The Mortgage Works and a specialist buy-to-let adviser like Oportfolio who possess the knowledge to help with the unique challenges of multi-let buildings.
If you are interested in purchasing or remortgaging an HMO, make sure your property is of the above categories, and in either event, always seek mortgage advice from experts to achieve the best possible result on your investment. Contact our team today to go over your possibilities. We are here to help.
