Stealth HMOs

When is a normal buy-to-let (BTL) house a stealth HMO (House of Multiple Occupancy)? When you think of an HMO you might consider a house with two kitchens, or it being more than three storeys high, or one let room-by-room with five tenants in it.

However, thousands of landlords might now own a HMO and have no idea about it… on for more information.


From 1st October 2018, HMO rules changed and now any property let to three unrelated people can be classed as an HMO, as the property will comprise of more than one household. This is the guidance set by the Government and individual councils then decide on their own rules and adoption.

So, if you have a standard mortgage on a property with three unrelated people living there and the local authority deems this an HMO, then the council will write to your lender to inform them. You will then receive a letter stating that you will need to remortgage onto an HMO product. Some lenders are reasonable and will allow you to remortgage at the end of the fixed term. However, some are different to this and will demand repayment within a shorter time scale.

Arc & Co. strongly recommend that landlords check with their local authority to see if a license is needed, and if you do need a new one, then contact your mortgage broker to start reviewing your new lending options. 

We are already seeing a number of clients receiving letters from their lenders. The good news is that there are a range of new, specialist BTL lenders who offer a whole range of HMO products - both in personal and Ltd company names - and as this area of the market is now more crowded, we have seen lowered mortgage rates and reduced fees.

The following link allows you to check on your local authority’s status when it comes to HMO rules.

If you are concerned about the above then please contact Alistair Hargreaves.


Alistair Hargreaves

Financial Consultant - Arc & Co.

T: +44 (0) 203 205 2129