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  • HMO & Multi-Lets

    Personally owned property to HMO

    I own a 5 bed property. I am going to convert this to BTL and rent a property for myself.

    The current 5 bed house is a perfect HMO property. My questions are:

    1. Should I let out HMO on my name or via ltd company? (Will I need to let out property to LTD company for less rent and LTD company will let out HMO?)

    2. I understand I will have to pay tax on rental income. Can any of this be offset against the rent I am going to pay for new property?

    3. If I let HMO personally how does expenses work? I will need to convert current property to HMO, fire doors, additional en suite etc. Do these expenses offset against rental income? How do I keep these separate?

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    Well (1) will probably be against your mortgage conditions, most prohibit rent-to-rent and corporate letting. I'm also not sure why you would want to do so? Is this something your accountant has advised perhaps? If so that's a decision for you and them to make. You could use a company as a letting agent for you, though again you must have an objective here. Not sure what it is. As for (2) and (3) again this is something you should take advice on from an accountant.

    If you own the property unencumbered you can convert it easily. If you have it on an HMO Mortgage or any other term mortgage, check your terms and conditions as its probably prohibited for you to make significant changes to the property. Especially adding ensuites, you would typically require short term finance.

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    _________________________________________________________________________


    My posts are not financial advice, just a rambling guy passing time on a coffee break.
    The team at Bespoke Finance offers advice, including Limited Company Buy-to-Let , HMO Conversion and Cheap Life Insurance.

    _________________________________________________________________________


    Have you done renting before? If not, then Do Not go into HMO as your first investment. 

    Your personal income will determine what strategies are good for you. If this is your first property and you're not looking to grow then it doesn't make sense to go via a Ltd Company route. 

    I would also research your area because the place where you live might fall under additional licencing scheme or an Article 4 area which may mean you need to get planning permission first. 

    I would say that you do plenty of research as it's not a short answer for what you're trying to do. Whilst the house might make a good HMO doesn't necessarily mean that it's the best option for your or the property.
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    Saagar

    Disclaimer: I have no legal expertise nor am I a qualified advisor on any subject. A humble landlord using an open forum to exchange ideas and experiences. 


    I disagree with the view the vanilla btl somehow prepares you for hmo.
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