Specialist lender Pepper Money has unveiled a new mortgage product for houses in multiple occupation (HMOs).

The lender’s new product range allows limited companies and individual landlords with at least 12 months of homeownership experience to finance or refinance HMO properties with up to six bedrooms. The properties must be appropriately licensed at completion and have an EPC rating of A to C to qualify.

With rates starting from 5.19% and a maximum loan-to-value of 75%, the new HMO product can be used across portfolios of up to 10 properties. The initiative responds to what the lender identifies as a gap in the specialist mortgage sector for landlords seeking to diversify holdings in a tight regulatory and affordability climate.

Unlike many high street lenders, Pepper Money will base affordability assessments solely on expected rental income, without requiring personal or business bank statements. Deposits may be funded from a variety of sources, including gifted money, director loans and equity release, and applications are not subject to credit scoring.

The lender said it aims to take a “human” approach to underwriting, relying on a more rounded set of criteria that includes broader financial circumstances and individual borrower profiles. Loans are available for terms up to 35 years, with lending possible up to age 85 — a move that may prove attractive to both newer entrants to the sector and those viewing property as a long-term income stream for later life.

Paul Adams (pictured), sales director at Pepper Money, said the launch marked a continuation of the lender’s efforts to meet the needs of landlords through specialist product design. “Our new HMO product is the latest in a series of new developments centred around supporting landlords,” he said.

“As a specialist lender providing specialised products, we know that landlords are operating within an increasingly complex regulatory environment and navigating affordability challenges which are affecting their behaviour. While traditional credit checks are valuable, our approach offers a broader view of financial health, promoting responsible lending and renting practices.”

Adams also emphasised the contribution that HMOs make to the wider private rental sector, describing them as “an affordable and accessible option in the face of rising rental demand and a growing gap between the amount of supply available.”