HMO lending in 2025: what our data reveals and why it matters for brokers

A closer look at the data

Our recent internal data across May, June and July highlight a consistent flow of business across our full HMO range. However, it’s standard HMOs that continue to dominate overall case volume. Properties with up to six bedrooms remain the go-to for many landlords, especially in popular university cities and commuter areas where tenant demand is stable and yields remain strong.

According to our data, 75% LTV HMO products are currently dominating the market. It’s likely down to a mix of factors and rising property costs, meaning more borrowers are leaning on higher leverage to make deals stack up.

We’re also seeing steady interest in larger HMOs with seven or more bedrooms. While these cases tend to be more complex, brokers are increasingly confident in placing them, especially where landlords are looking to scale portfolios or maximise income potential.

Expat HMOs, though a smaller part of the overall mix, are gaining traction. More brokers are placing cases for UK nationals living overseas, often purchasing through limited company structures. These borrowers are frequently underserved by the market, and our flexible criteria and case-by-case approach are helping brokers unlock more opportunities in this space.

What this means for you and your clients

For brokers, these trends highlight the increasing importance of specialist lenders who can assess each case on its own merits. Manual underwriting, consistency on affordability, and straightforward criteria are key to placing HMOs quick and successfully.

For landlords, it means more choice and less compromise. Whether your client is expanding their portfolio, refinancing to release capital, or branching into student or shared housing, our HMO range is designed to support a wide variety of investment strategies.

Importantly, our criteria stay consistent across property types. There are no minimum income requirements, no cap on background portfolios, and our ICR calculations are applied at 125% for limited companies and basic rate tax payers, at 145% for higher rate tax payers and 135% for mixed. That predictability allows brokers to present clear, reliable options to their clients without second guessing affordability hurdles.

Removing the roadblocks to specialist lending

We know that HMO cases can come with challenges, especially when trying to place them with lenders using rigid, tick-box criteria. But many of the typical barriers broker face simply don’t apply at Foundation Home Loans.

Another common hurdle is income. Many lenders still impose minimum income requirements that can block even experienced landlords from progressing. That’s not the case with us; our no minimum income approach on HMOs works because of the way we underwrite. Every case is manually assessed, which means we’re not relying on rigid system rules or auto-declines. Instead, we look at the experience of the landlord, the strength of the rental income, and the overall quality of the deal. It gives brokers the ability to place more complex cases.

Portfolio size can be an issue elsewhere, but at Foundation Home Loans, we place no cap on background properties. Whether your client has one HMO or a large and growing portfolio, we’re open to support their needs.

We also understand that many HMO properties don’t fit the standard mould. Whether it’s a property with multiple kitchens, en-suites, or a semi-commercial property, we regularly lend on cases with these kinds of features under our HMO plus products. That’s because we look at the real-world viability, not just the structure on paper.

Got a tricky HMO case to discuss?

Whether it’s a standard six bed, a large student let, or something a little more complex, like an expat or limited company purchase, we’re here to help. Our team is experienced in assessing cases that fall outside the high street, and we’re ready to work with you to get them over the line. If you’re preparing to place an HMO case, we recommend speaking to your regional account manager for a quick affordability sense-check before submission. It’s a simple step that can help you avoid delays and give you a clear direction from the start.

Contact your regional account manager today – we’re here to help you place more of the cases others may turn away.