Refinancing HMO and Multi-Unit Properties in 2025: A Landlord’s Guide
Specialist refinancing strategies for landlords managing Houses in Multiple Occupation (HMOs) and multi-unit freehold blocks (MUFBs) in 2025
Refinancing Houses in Multiple Occupation (HMOs) and multi-unit freehold blocks (MUFBs) is a specialist area of the UK mortgage market. While these properties often deliver higher rental yields than single lets, they also come with unique financing challenges.
In 2025, lenders are showing renewed appetite for HMOs and multi-unit assets — but they’re applying stricter criteria, more detailed underwriting, and in many cases, requiring specialist valuations. For landlords, understanding the refinancing process and positioning your case correctly can unlock better rates, release capital for expansion, and improve long-term returns.
Why landlords refinance HMOs and multi-unit properties in 2025
1. Unlocking equity for portfolio growth
Strong demand for high-yield rental properties has pushed up valuations in many areas, especially for compliant, well-managed HMOs. Refinancing can free up funds for:
- Purchasing additional HMOs or MUFBs
- Converting properties to increase room numbers or unit count
- Diversifying into other high-yield property sectors
2. Securing better rates and terms
If your property has improved in value or if you’ve increased rental income, you may qualify for more competitive mortgage products. Specialist lenders are offering lower rates for landlords with a proven HMO/MUFB track record.
3. Switching lenders for greater flexibility
Some landlords refinance to move away from restrictive lenders that cap the number of HMOs or limit loan sizes.
4. Releasing funds for refurbishments
Upgrading kitchens, bathrooms, or communal spaces can boost rental appeal and justify higher rents, which in turn improves refinancing prospects.
Key differences in refinancing HMOs vs. standard buy-to-let
Unlike single-let properties, HMOs and MUFBs require lenders to assess:
- Commercial-style valuations: Based on rental income rather than comparable property sales.
- Licensing compliance: Evidence of up-to-date HMO or selective licences.
- Management arrangements: Professional, experienced management is a plus.
- Tenant profile: Professional tenants often attract better terms than student-only lets.
Lenders also often request:
- Detailed floor plans
- Fire safety and compliance documentation
- Evidence of consistent rental income
Lender criteria for HMO and MUFB refinancing in 2025
Most specialist lenders in 2025 will look for:
- Minimum rental coverage: Often 130–145%, depending on tax status.
- Property size: Some lenders restrict large HMOs (7+ bedrooms) to certain products.
- Borrower experience: New HMO landlords may be limited to lower LTVs.
- EPC rating: Pressure is mounting for EPC band C or above, with exemptions tightly controlled.
Steps to a successful HMO/MUFB refinance
Step 1: Prepare your documentation
Have tenancy agreements, licences, EPCs, fire safety certificates, and accounts ready. Missing paperwork is one of the most common causes of delays.
Step 2: Maximise rental income before valuation
Small improvements like adding en-suite bathrooms, upgrading furnishings, or improving communal areas can increase achievable rent — and thus, the valuation.
Step 3: Choose the right valuation method
A lender may use either:
- Bricks-and-mortar valuation (lower value, based on property sales data)
- Commercial valuation (higher value, based on rental income potential)
Specialist brokers can help position your case for a commercial valuation, which is often more favourable for high-yield properties.
Step 4: Consider ownership structure
Some lenders prefer HMOs and MUFBs to be held in limited companies. Refinancing can be an opportunity to restructure — but seek specialist advice on tax implications first.
Market trends for HMOs and multi-unit properties in 2025
- High demand from tenants: Rising rental costs and affordability pressures mean more renters are opting for shared housing.
- Increased lender competition: More lenders are entering the HMO market, driving better product choice.
- EPC and compliance pressures: Properties with poor energy efficiency may face higher borrowing costs unless upgrades are planned.
- Yield resilience: Even in uncertain markets, well-located HMOs and MUFBs tend to hold strong rental yields.
Risks and considerations
- Void periods: Larger HMOs and MUFBs can suffer greater income drops if multiple rooms are vacant.
- Higher management intensity: These properties require more hands-on management or professional agents.
- Market volatility: Specialist finance products can be more sensitive to changes in lender appetite.
- Regulatory risk: Licensing rules and planning restrictions can change, impacting refinancing options.
Example refinancing scenarios
Example 1: Equity release for expansion
A landlord refinances a six-bedroom HMO in Bristol, moving from a 5.8% to a 4.6% rate, releasing £150,000 for the purchase of a second HMO in the same area.
Example 2: Increasing property value
By upgrading an MUFB in Manchester with improved kitchens, bathrooms, and fire safety systems, the landlord achieved a higher rental yield, securing a valuation £120,000 above the previous level.
Example 3: Moving to a specialist lender
A landlord with multiple HMOs refinanced with a lender offering higher LTVs and more generous rental coverage ratios, enabling further portfolio growth.
How Willow Private Finance can help
At Willow Private Finance, we understand the specialist nature of HMO and MUFB refinancing. We work with a wide panel of lenders — from high street banks to specialist providers — to secure terms tailored to your property type, yield profile, and long-term strategy.
Whether you are refinancing a single high-yield HMO or a large block of flats, we can:
- Secure competitive rates from specialist lenders
- Position your case for a commercial valuation
- Manage the refinancing process from start to finish
- Identify opportunities to restructure for growth
Frequently Asked Questions
What is special about refinancing HMOs and multi-unit properties compared to standard BTLs?
Because HMOs and multi-unit freehold blocks (MUFBs) generate income from multiple tenants and may be licensed, lenders often treat them as hybrid or commercial assets. They use
income-based valuations, demand licensing and compliance proof, and scrutinise management, tenant mix, and safety records.
Willow Private Finance
Why might landlords refinance these properties in 2025?
- To release equity for further acquisitions or expansion Willow Private Finance
- To secure better interest rates or terms when the property has improved in value or yields Willow Private Finance
- To switch to more flexible lenders or remove caps on HMOs imposed by existing lenders Willow Private Finance
- To fund renovations or upgrades that further increase value or rental income Willow Private Finance+1
What underwriting criteria do specialist lenders apply in 2025?
- Rental coverage / serviceability: typically requiring 130 % to 145 % of income to exceed mortgage costs. Willow Private Finance
- Property size and bedroom count: some lenders limit how large an HMO (e.g. 7+ rooms) they will finance. Willow Private Finance
- Borrower experience: new HMO landlords often get more conservative LTVs. Willow Private Finance
- Energy performance / EPC ratings: rising importance, and lenders may demand improvements for lower borrowing risk. Willow Private Finance
- Compliance & licensing: proof of valid HMO licences, fire safety, floor plans, tenancy agreements, and maintenance history. Willow Private Finance+1
What steps can landlords take to improve their refinancing prospects?
- Get all documentation ready — licences, EPCs, fire safety, tenancy records, accounts. Willow Private Finance
- Increase rental income ahead of valuation — e.g. through upgrades, better furnishing, or adding en-suites. Willow Private Finance
- Choose valuation method carefully — push for a “commercial valuation” based on income (often yields higher value than bricks-and-mortar approach). Willow Private Finance
- Consider ownership structure — many lenders prefer HMOs to be held in limited companies; refinancing is an opportunity to realign. Willow Private Finance
- Time the refinance after strong trading — doing it just after the property has shown strong performance improves lender confidence. Willow Private Finance
What risks should landlords watch out for when refinancing HMOs / MUFBs?
- Void periods: if many rooms are empty simultaneously, income may fall sharply. Willow Private Finance
- Management burden: these properties demand more hands-on oversight, or involve third-party agents with associated costs. Willow Private Finance
- Lender sentiment shifts: because these are specialist asset classes, changes in lender appetite can tighten terms. Willow Private Finance
- Regulatory / licensing changes: new HMO regulations or stricter licensing conditions can alter refinance eligibility. Willow Private Finance
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About the Author: Wesley Ranger
This article was written by Wesley Ranger, Director at Willow Private Finance. Wesley leads our team of specialist brokers, supporting clients in the UK and internationally. Over his career, he has arranged complex and high-value property finance transactions ranging from bespoke residential mortgages in the hundreds of thousands to structured facilities exceeding £100 million for major developments.
Operating within an FCA-regulated, whole-of-market brokerage, Wesley works closely with clients to design tailored strategies that align with their broader financial goals. His experience spans private banks, specialist lenders, and international financing structures, giving clients a competitive advantage in even the most challenging lending environments.
Important Notice
Your home or property may be repossessed if you do not keep up repayments on your mortgage or other loans secured against it. The content of this article is for general information only and does not constitute financial or mortgage advice. Mortgage rates, criteria, and product availability can change at any time and will depend on your individual circumstances. Always seek personalised advice from a qualified mortgage adviser before making any financial decisions.
