Letting a property to more than one occupant is a very appealing and growing option amongst landlords. It can bring in a much higher return and is in general more profitable than a single let. But what classifies as a multi-let?

A multi-let is multiple tenants sharing the property and renting one room each whilst sharing facilities such as the lounge, kitchen and often a bathroom. These are essentially HMOs, but with a smaller number of people living in them. Multi-lets are typically your standard family homes with an extra few rooms to inhabit more people in, typically no more than 6.

What is the difference between Multi-Lets and HMOs?

Multi-let is generally a property that is let out to more than one household, like a HMO. These can be for students, professionals, or singles. A Multi-let can be classed as a HMO, depending on the number of bedrooms, stories in the building and the amount of tenants. Essentially, a multi-let can be put down as a HMO if there are MORE than 5 tenants from different households living in the property.

The main difference between a HMO and a multi-let is that HMOs usually require more licensing and come with more specific rules since their purpose is to inhabit more people. Multi-lets on the other hand, don’t usually require a licence. However, it’s always best to check with your local council. The definition may vary depending on your local authority.

What’s the difference between Multi-lets and a Single let?

Single lets are a lot simpler than multi-lets and HMOs. A single let is one tenancy agreement between either one person or a family. This means that only one person is paying rent. A multi-let however, will have multiple tenants living in one property and individually paying rent. This means that the landlord has more than one tenant paying them rent in one month, like a standard HMO.

Of course, multi-lets are the better option for property investors as it provides you with a much higher and stable income. With that being said, starting off with a single let come with a much lower risk of hassle managing multiple tenants. If you’re a first time investor, it helps you gain more experience in the property market. It’s important to keep in mind as well, that most lenders will want you to be an experienced landlord before they lend to you for multi-let properties.

Essentially, even though both multi and single lets are a form of cash coming into your account every month, single lets are better for gaining experience. They can help you save up and even pay off the refurbishments on your multi-lets.

What should you consider when investing into a Multi-let property?

Think about the costs

Just like a HMO, this will be a lot more pricey than your standard single let. Even though this type of property typically brings in a higher cash flow, it can require a bigger input from the beginning. This is because not only are multi-lets usually more expensive to purchase, but 9 out of 10 times, you will be buying a property to then refurbish it into a multi-let. And since almost every multi-let is furnished and ready for a tenant to move in, it’s crucial to keep in mind that this will require more savings.

Will your property need HMO licensing?

Most multi-lets will require a HMO licence so it’s always best to check with your local council. One thing to keep in mind is that if your property is more than two stories high, a licence will be required.

All bills included

Almost every multi-let and HMO will provide their tenants with an all bills included agreement. This means that the utility bills will be the landlord’s responsibility and the cost would be split between each tenant. That way you provide a lot less hassle for the tenant as they only have to make one payment a month instead of multiple. It looks a lot more attractive to renters as it’s much more convenient.

Making this offer could result in tenants renting for longer which secures the landlord with a more manageable investment.

Legal requirements

Since multi-lets are made to inhabit more than one tenant, a lot of the time property investors will buy a standard family sized house to then refurbish it to make more bedrooms. When doing so, there will always be regulations that must be followed.

Always make sure to find out exactly what you need to stay compliant. Getting legal advice from your council for guidelines is something to consider.

Tenant movement

One other thing that multi-lets and HMOs have in common is the target tenants you will be renting out to. Since most of them will be working people or students, all landlords must take into consideration that they may not be staying in the property long-term. Of course, there might be a tenant that is potentially looking for a longer stay while they work or save money. However, with this type of property, it will typically be young individuals who are always on the move.

Licensing and Insurance

If you are renting out on a single-let basis in England, no licences are required. However, if you are renting out to multiple tenants, a standard house insurance policy will not be able to cover you. For this reason, you will need to speak with an experienced insurance broker to guide you in the best direction. They will also help you find a suitable insurance policy for your buy to let.

You might have to apply for planning permission which can be:

• C3 – A family home or up to 6 people living together as a single household
• C4 – HMO housing between 3 and 6 unrelated people
• Sui Generis HMO – Properties housing seven or more unrelated people

Both licensing and planning are under the control of the council area. It’s important to know whether you want to let the property as HMO or not, and speaking to your local housing department to discuss their rules is advised. Not every local authority has the same appetite or rules.

Keep in mind that HMOs may require more licensing and there are some additional regulations.

What areas are best suited for Multi-Lets?

The best and most common areas for these types of properties are near universities, hospitals and even airports. This is because students and individuals working within the area will be more than likely looking for cheap housing and not mind sharing facilities with others. These are also types of tenants with busy lifestyles, especially if they are working at hospitals or airports. Often they might only require a place to sleep and live.

Again, these might not be individuals looking to rent long-term, however you are still very likely to find replacement fast due to high demand in affordable rooms to let.

Pages which others have found useful…

Buy to Lets Landlord Property Investor Loans First time Buyer Buy to Let HMOs Government website about house’s in multiple occupation

Latest Articles

Whole-of-Market Guidance for Multi Let Mortgages

Securing competitive terms on multi let mortgages requires expert underwriting knowledge. In addition, our specialist broker team works directly with over 90 specialist lenders across the UK.

Consequently, reviewing your multi let mortgages options with an FCA-authorised specialist credit broker ensures whole-of-market access while avoiding unnecessary fees and delays.

Specialist Underwriting & Whole-of-Market Access

Because specialist lending facilities require bespoke underwriting, comparing lenders across the UK is essential. Explore our complete guide to Buy to Let Mortgages to understand how different lending criteria apply to your requirements.

Promise Money is an independent credit broker authorised and regulated by the Financial Conduct Authority (FRN 681423). Our experienced team reviews your specific circumstances to secure optimal terms across 90+ UK lenders.