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OMB guide 24 · 2027 edition

HMO and Holiday Let Mortgages in 2027

Licensing, planning, valuation and lender criteria for HMOs, plus income evidence and local rules for holiday lets.

Written by the OMB team · reviewed by Akhil Mair, Managing Director, CeMAPUpdated October 2026How we write and check our content

In this guide
  • What these mortgages are and who they suit
  • What counts as an HMO
  • Planning, use classes and Article 4
  • How HMO lenders assess your application
  • Fire safety, room standards and day to day management
  • Choosing a structure and planning for 2027
  • The Renters' Rights Act and what it means for HMO landlords
  • How holiday let mortgages work
  • Tax and local rules for holiday lets
  • Insurance, costs and timeline
  • Tips and tricks, common mistakes and a checklist
  • How OMB can support you
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The short version

HMOs and holiday lets are specialist forms of buy-to-let. Both can earn more than a standard let, and both carry extra rules, higher running costs and fewer lenders. This guide explains how each works, what lenders look for and what to check before you buy.

  • An HMO is generally a property let to three or more people from more than one household who share facilities, and larger HMOs need a mandatory licence in England.
  • Councils may also run additional or selective licensing, and Article 4 directions can require planning permission to turn a house into a small HMO.
  • Lenders usually add up room rents, apply a rent cover test, and may value an HMO on bricks and mortar or on investment value.
  • Holiday let lenders usually assess income using a letting agent projection of low, mid and peak season rates.
  • The furnished holiday lettings tax regime was abolished from April 2025, and local rules on short lets vary across England, Scotland and Wales.

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What the full guide covers

  1. What these mortgages are and who they suit
  2. What counts as an HMO
  3. Planning, use classes and Article 4
  4. How HMO lenders assess your application
  5. Fire safety, room standards and day to day management
  6. Choosing a structure and planning for 2027
  7. The Renters' Rights Act and what it means for HMO landlords
  8. How holiday let mortgages work
  9. Tax and local rules for holiday lets
  10. Insurance, costs and timeline
  11. Tips and tricks (8), common mistakes (6) and a 10 point checklist
  12. How OMB can support you, with a fictional worked example
Illustrative example · not a real client

Illustrative example: a first HMO

Daniel owns two standard buy-to-let properties and wants to buy his first licensed HMO. He provides a tenancy schedule showing current room rents and plans to use a managing agent. We check the licence, the planning status and whether the area has an Article 4 direction, then compare lenders that accept first time HMO landlords and that value on the basis he prefers. The lender applies a rent cover test using the room rents. Daniel also budgets for the stamp duty surcharge, safety certificates and a cash reserve. This is an illustrative example only, not a real client, and every case is different.

Names, figures and circumstances are fictional and illustrative only. They do not represent an actual client of Our Mortgage Broker Limited.

HMO and Holiday Let Mortgages in 2027 guide cover
Free 2027 guide

HMO and Holiday Let Mortgages in 2027

Licensing, planning, valuation and lender criteria for HMOs, plus income evidence and local rules for holiday lets.

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We are an independent, whole of market broker with CeMAP-qualified advisers. We know which lenders accept first time HMO landlords, larger HMOs, holiday lets and limited company ownership.

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Your home may be repossessed if you do not keep up repayments on your mortgage. Most buy-to-let and commercial mortgages are not regulated by the Financial Conduct Authority. Our Mortgage Broker Limited is authorised and regulated by the Financial Conduct Authority (FRN 944663). Registered in England and Wales, company no. 11358646. Registered office: 23 Berkeley Square, Mayfair, London W1J 6HE. There may be a fee for mortgage advice: we may charge up to 1% of the loan amount, and our typical fee is £500. Your fee agreement sets out the exact fee and when it is payable (at decision in principle, application or mortgage offer); fees are not refundable once due. We usually also receive commission from the lender. Protection and insurance products are subject to underwriting and the policy terms and conditions. This guide is general information only and is not personal advice. Case studies are fictional, illustrative examples and do not represent real clients. Rates, tax and regulatory information are correct as at October 2026 and may change, including at the Autumn Budget on 28 October 2026.