Buy-to-Let Mortgages Get Easier for HMO Landlords

Buy-to-let mortgages get easier for HMO landlords as lenders adapt their criteria to better reflect the realities of the rental market. With energy efficiency rules tightening and borrowing costs still a concern, recent changes are opening up new funding options for investors who had previously faced restrictions.

One of the most notable shifts comes from Pepper Money, which has introduced a more pragmatic approach to EPC requirements while also cutting rates across its buy-to-let range.

What’s Changing in Buy-to-Let Mortgages

Lenders are increasingly recognising that rigid criteria can limit good-quality rental supply. As a result, buy-to-let mortgages are becoming more flexible, particularly for specialist property types such as Houses in Multiple Occupation (HMOs).

Recent enhancements focus on:

• Broader property eligibility
• More realistic energy efficiency expectations
• Competitive pricing to support investor cash flow

This shift supports landlords operating in older housing stock, where achieving top EPC ratings can be challenging in the short term.

EPC D and Lower Rating Mortgage Options for HMO Investors

A key development for landlords is the growing availability of EPC D rating mortgage options. Previously, many lenders restricted lending to properties with EPC ratings of A to C, limiting finance for otherwise strong HMO investments.

Accepting EPC D (and E) properties:

• Expands the pool of financeable HMOs
• Supports phased energy improvements rather than upfront costs
• Makes it easier to refinance existing stock

HMOs often operate in converted or older buildings. Greater flexibility allows landlords to focus on yield, tenant demand, and compliance, while planning energy upgrades over time instead of delaying purchases or refinances.

Buy-to-Let Property Financing Built Around Rental Income

Modern buy-to-let property financing is increasingly centred on rental performance rather than personal income. For many landlords, this is a major advantage.

Affordability is commonly assessed using:

• Interest Coverage Ratios (ICRs)
• Market rent valuations from professional surveyors

ICR-Based Assessments Explained

ICRs measure whether rental income comfortably covers mortgage payments. This approach benefits:

• Portfolio landlords
• Limited company investors
• Investors with complex or variable personal income

It also allows landlords to scale portfolios without being constrained by traditional income multiples.

What This Means for BTL Mortgage Rates

Alongside criteria changes, BTL mortgage rates have become more competitive. Recent reductions across two- and five-year fixed products provide landlords with improved options for managing costs.

Lower rates help investors:

• Protect monthly cash flow
• Plan long-term HMO strategies
• Balance certainty against flexibility

Choosing the Right Fixed Term

• Two-year fixed deals may suit investors planning refinancing or property upgrades
• Five-year fixed deals offer longer-term payment stability in uncertain rate environments

The right choice depends on risk appetite, portfolio plans, and refurbishment timelines.

Who Benefits Most From These Buy-to-Let Mortgage Changes

These developments are particularly relevant for:

• HMO landlords expanding or refinancing
• Investors targeting value-add or older properties
• Portfolio landlords using limited companies
• Buyers seeking flexible buy-to-let property financing

Conclusion

Buy-to-let mortgages get easier for HMO landlords as lenders relax EPC rules, improve affordability assessments, and sharpen BTL mortgage rates. For investors, this means greater flexibility, broader property choice, and improved access to funding—key advantages in a competitive rental market.

If you are considering expanding your buy-to-let or HMO portfolio and want expert guidance through every stage of the investment journey, from property selection to financing, refurbishment, and ongoing management, Galaxy of Homes can help.

Our end-to-end, hands-on approach is designed to make property investing simple, transparent, and scalable for investors at every level.

Speak to Galaxy of Homes Today

Or visit www.galaxyofhomes.co.uk to learn more.