Thinking of investing in property? Two common routes are Buy-to-Let and HMOs (Houses in Multiple Occupation). But how do they compare — and which is the smarter choice for you?
In this guide, we’ll explain the differences, weigh the pros and cons, and help you decide which type of investment best suits your goals.
What Is a Buy-to-Let Property?
A Buy-to-Let (BTL) property is a rental home let to a single household — usually a couple, family, or individual tenant. These properties are straightforward to manage, often attract long-term renters, and are a popular starting point for first-time landlords.
Buy-to-Let mortgages are widely available, and while lenders usually require a larger deposit and set criteria around affordability, they’re more accessible than HMO products.
Looking to get started?
Explore Buy-to-Let mortgages with expert advice from Lendese.
Buy-to-Let MortgagesWhat Is an HMO?
An HMO (House in Multiple Occupation) is a property rented to three or more unrelated tenants who share communal areas like kitchens and bathrooms. Common among students and young professionals, HMOs can bring in significantly more rental income, but they also come with more complexity.
Depending on the number of tenants and the local authority, you may need an HMO licence and comply with specific safety, space, and management rules. Mortgages for HMOs are also more specialist, often requiring experience as a landlord and additional documentation.
HMO vs Buy-to-Let: Key Differences
Here’s a side-by-side comparison to help you quickly understand how the two strategies stack up:
| Factor | HMO | Buy-to-Let |
|---|---|---|
| Rental Income | Higher (multiple tenants paying rent separately) | Lower but often more consistent |
| Rental Yield | Typically 8–10% | Around 5–6% |
| Mortgage Options | Fewer, with stricter criteria | Widely available and easier to access |
| Licencing Required | Often yes (especially for 5+ tenants) | Rarely |
| Tenant Management | Higher turnover, more admin | Longer tenancies, less hands-on |
| Running Costs | Higher (more maintenance, utilities, furnishings) | Lower day-to-day expenses |
| Void Period Risk | Lower (some rooms still generating income) | Higher (income stops when tenant leaves) |
Which Is the Better Investment?
That depends entirely on your goals:
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New to property investing?
A Buy-to-Let is often the safer, simpler route with fewer legal and financial hurdles. -
Want to maximise income?
An HMO can deliver higher returns — if you’re prepared to manage more tenants and handle the extra complexity. -
Already have a rental property?
HMOs can be a smart next step in growing your portfolio and increasing yield — especially if you’re experienced and ready to take on more responsibility.
Can You Get a Mortgage on Both?
Yes, but the process is different.
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Buy-to-Let mortgages are widely available through high street lenders and brokers. You’ll typically need a 20–25% deposit and evidence that the rental income will cover the mortgage.
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HMO mortgages are more specialist. You may need experience as a landlord, a larger deposit, and to work with a lender that understands HMO risks and regulations.
Not sure what you’re eligible for? Speak to a Lendese advisor. we’ll help you understand your options and find the right product for your plans.
Final Thoughts
Both HMOs and Buy-to-Let properties can be excellent investment strategies, it all comes down to your experience, time commitment, and financial goals. If you’re starting out, BTL may be more manageable. If you’re aiming for higher returns and are ready to be more involved, an HMO could be the right fit.
Whatever path you choose, getting the right mortgage advice is crucial. At Lendese, we help property investors at every stage, from first-time landlords to experienced portfolio holders.