Glossary
Buy-to-Let
Buy-to-let refers to the practice of purchasing a property specifically to rent it out to tenants, rather than living in it yourself. This type of investment allows the owner to generate rental income, which should cover the mortgage payments, maintenance costs, and other expenses, while potentially providing a profit. Buy-to-let typically refers to a single-let residential dwelling.
It's worth noting that there are specialist finance products that should be used, as using a standard mortgage and renting to tenants is usually in breach of your contract.
House in Multiple Occupancy
House in Multiple Occupancy refers a single residential dwelling inhabited by 3 or more individuals, forming more than 1 household. The tenants will share toilet, bathroom, or kitchen facilities with other tenants.
Where there is often confusion is mixing licensing with planning, they have different regulations and requirements. Planning must be applied for if 3 or more unrelated individuals share the property; up to 6 people will require a C4 use class, 7 or more requires Sui Generis use class. Then there is licensing, there are various licensing models but those that apply to HMOs are Mandatory, Additional, and Selective. Mandatory is required if 5 or more individuals forming more than 1 household occupy the property. Additional licensing can be required by the local authority if they wish to extend the properties requiring a license that are not covered by the mandatory license.
Selective licensing may be applied by the local authority if there are certain social elements at play which they wish to manage in some way.