- Houses in Multiple Occupancy (HMOs)
A HMO in England and Wales has at least 3 tenants living in it in forming more than one household and who share toilet, bathroom and kitchen facilities.
A HMO in Scotland has at least 3 tenants from 3 or more families with basic shared amenities.
Although in the buy-to-let market it is not unusual for landlords to own HMOs particularly in university towns and cities where students sharing houses are common, many mainstream lenders do not lend on these types of properties due to their complexity. The value of the loan required is often over the maximum lending level and income can be difficult to assess due to the number of parties involved.
- Multi-unit freehold properties
Not to be confused with multi-let properties, which are similar to HMOs, multi-unit freehold properties are several individual homes on a single freehold title such as blocks of flats. Three blocks of flats could be purpose built or converted from larger houses, but each unit will have its' own tenancy agreement and separate entrances for each household. There may be some shared spaces such as communal gardens or hallways but the space within each unit will be private and only the residents will have access to it. Multi-unit freehold properties are popular with professional landlords but it can be difficult to get a mortgage from a mainstream lender due to complexities that are similar to mortgages on HMO properties.