HMO Funding
Your Guide to HMO Funding – Houses in Multiple Occupation

1. The HMO Opportunity

More property professionals are now turning to HMOs as their long-term strategy choice for real estate investment. Higher-than-average yields can be achieved if landlords are prepared to invest in providing high-quality, self-contained accommodation with an element of shared services and which meet the licensing regulations of the local authority.

With the average age for first-time buyers increasing and the levels of guaranteed income and deposit required to buy a property on the rise, the demand for affordable rental accommodation in cities and commutable locations has never been greater.

With this in mind, many investors now view the newly-imposed higher levels of regulation around HMO as a barrier to entry for those landlords unwilling or unable to comply but an opportunity for themselves.

This presents a unique window of opportunity to buy and invest in poorly-maintained property by refurbishing and converting buildings into HMO-compliant assets which, in turn, can provide a strong long-term revenue stream difficult to match through standard Buy-to-Let investment strategies.

2. Key Considerations for HMO investment

  • Location, location, location.
  • Is there a demand in the area for self-contained “bed sit” type accommodation with a shared kitchen and/or laundry room?
  • Is the property close to public transport facilities?
  • Is there parking near by if a car is needed?
  • Is employment in the general area buoyant?
  • What is the price differential in the area for the rental of a ‘standard’ flat versus a room in an HMO property?
  • Are you personally experienced in property development, and/or do you have access to experienced building contractors who could be overseen by a qualified project manager?

3. Local Authority – Licensing & Planning

The attitude of local authorities when granting licences for HMOs differs from area to area. Please note, however, that compliance with building regulations, health and safety standards and minimum space and services requirements will need to be satisfied to achieve licensing approval across all regions.

Planning consent will be required (and can be declined) if the property is categorised as an HMO and is in a region where the Council has imposed Article 4.

Where the local authority has imposed Article 4, it will usually be as a result of over-population in the area and the consequent strain imposed on services and infrastructure.

In areas where Article 4 applies, formal planning consent will always be required.

4. Costs and Return on Investment

Local capital values and the costs to convert a property into a fully-compliant HMO need to be meticulously calculated before committing to a buying decision.

The full costs of acquisition - including SDLT, legal fees and the refurbishment costs - together with any ongoing services and borrowing costs, all need to be factored in to calculate an accurate return on investment.

HMOs do generally deliver higher-than-average yields; and, if they are fully compliant, well-maintained and licensed, can enjoy higher valuations as landlords will often pay a premium for a properly-licensed going concern.

Clearly, regional property prices vary greatly, as do rental costs. As a general rule, however, the highest yields are achieved in areas where the cost of buying a family home is below the UK average but where it is well-connected to a densely populated town or city with lower-than-average unemployment and other social deprivations.

5. Building your HMO Portfolio

Tuscan Capital are HMO funding specialists and can provide competitive, flexible leverage to help investors build a significant HMO portfolio.

Subject to the property and the borrower’s circumstances, we can provide funding up to 70% of acquisition costs and up to 100% of refurbishment costs.


Contact Tuscan Capital today for specialist short-term property financing. Use the phone number below or complete the form below and we will get back to you as soon as possible.

CALL: 020 7846 9030

London Office

3rd Floor
12 - 18 Grosvenor Gardens
+44 (0)20 7846 9030

Case Studies

Criteria Overview

Bridge Solutions

Nationwide coverage with flexible packages starting at just £150,000 and up to 75% LTV. Loan terms from 3-18 months and from 0.75% per month.

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Bridge Solutions

Redefining the conventional... our ‘Inside the Box’ bridge solutions.

At Tuscan Capital, our premium bridging finance offerings are designed for ‘conforming’ customers whose needs can be accommodated quickly and with a minimum of paperwork.

Key features include:

  • Nationwide coverage (England & Wales).
  • Rates from 0.75% per month to 1.25% per month.
  • Terms from 3 months to 18 months.
  • Max LTV - 75% Open Market Value.
  • First charge and second charge loans (subject to consent being granted by the first mortgagee).
  • Loan facilities from £150,000 to £7,500,000
  • All types of residential property considered including new-builds, HMOs, semi-commercial, small blocks of flats and BTL portfolios.
  • Land with planning consent and commercial property can also be considered.
  • Foreign nationals and ex-pats considered with appropriate Know Your Customer (KYC) documentation and proof of residency supplied.
  • Available to private individuals, corporate entities, Special Purpose Vehicles (SPVs) and off-shore limited companies.
  • Credit-approved term sheets typically issued inside 24 hours.

Please note: this is not an exhaustive list of requirements.

Possibilities rediscovered... our ‘Outside the Box’ bridge solutions.

Shading into conventional lending but with a tone and focus of its own, our ‘Outside the Box’ lending palette offers elastic solutions for more complex bridge scenarios. These might include, but are not necessarily limited to, the following:

  • Where the loan size is greater than £3,000,000.
  • Where the property type or tenure is not conventional, e.g. short leases etc.
  • Where the borrower has a need to refinance an existing overdue facility, e.g. to re-bridge a bridge.
  • Where a mezzanine loan is required.
  • Where multiple properties and/or land is offered as additional security.
  • Where the property is being acquired from an LPA receiver or is a distressed sale at an under-value price.

Unconventional doesn’t mean impossible. That’s why we prefer to take an ‘Outside the Box’ approach to cases that merit it.

We don’t pre-judge. We prefer to listen. So call us if you have a client whose circumstances don’t quite fit the more rigid requirements of some other bridging lenders. You’ll get a sympathetic hearing and a rapid decision from our experienced team.

For more information, call the team on: +44 (0)20 7846 9030


For experienced developers in need of competitive and flexible funding support to see their projects through to practical completion.

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Competitive funding support for experienced developers

Lending criteria:

  • Experienced developers only.
  • First charge only.
  • England and Wales.
  • Max LTV - 70% (at time of lending).
  • Total refurbishment budget must be less than 100% of the current value of the property or £250,000, whichever is the lower.
  • No ground-up development.
  • Project must not increase the total square footage by more than 20%.
  • Tuscan Capital will engage a project monitor to approve drawdowns.
  • Borrower to cover any cost overruns from their own resources.

Designed especially for experienced real estate developers seeking to maximise property valuations, our competitive refurbishment funding packages can help close your projects in timely and cost-efficient fashion.

For more information, call the team on: +44 (0)20 7846 9030

Auction Funding

Auction funding is a ready-approved 'hunting fund' designed to provide credibility and proof of funds when bidding for property at auction.

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Auction Funding

A ready-approved hunting fund

Key features include:

  • Funding available up to 85% of the purchase price or up to 75% of the valuation, whichever is the lower.
  • A certified Offer of Finance subject only to final valuation and title clearance.
  • Access to a dedicated legal team experienced in managing urgent property purchase matters.
  • Title insurance specially negotiated to expedite the legal process and help overcome red tape and bureaucratic hurdles.
  • The services of a carefully-selected Valuation Panel to provide prompt turnaround times (within 48 hours) and a copy of the final report immediately upon issue.
  • Lending against bricks and mortar in England & Wales from £150,000 to £7,500,000

Designed with speed and confidence in mind, Auction Funding by Tuscan Capital provides the perfect solution for property bidders looking to close purchases quickly and with certainty.

For more information, call the team on: +44 (0)20 7846 9030

HMO Funding

Market-leading funding packages for property investors seeking competitively-priced leverage to help build a significant portfolio of HMO assets. 

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HMO Funding

Flexible borrowing options from your HMO lending specialist

At Tuscan Capital, we specialise in providing property professionals seeking to grow their exposure to the HMO sector with competitively-priced and highly flexible funding solutions.

Key features for our lending packages include:

  • Funding available up to £3,000,000
  • Funding of purchase price up to 75% LTV
  • Funding of refurbishment costs up to 100%
  • Funding up to a total of 65% of LTGDV
  • Fast, flexible delivery of funds and a simple drawdown process
  • Industry leading service at competitive pricing

For more information call our team on: +44 (0)20 7846 9030

NB: We welcome enquiries from brokers, advisers, real estate investors and professionals. As a non-regulated lender, we are unable to consider bridging finance applications from owner-occupiers.

The team at Tuscan Capital comprises some of the best-known names and faces in UK bridging. With years of experience between us, you can be assured of dealing with people who know and understand the intricacies of the short-term lending market.

Colin Sanders - CEO

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