within the UK and all HMOs must be registered and must comply with certain standards and obligations. An HMO in Scotland is a property that is shared by three or more tenants who aren't members of the same family or household. The landlord must be "a fit and proper person" and there are annual inspections to check the property (2006 Act). Hostels and halls of residence for students or nurses are considered to be HMOs in Scotland and the Scottish Government is considering extending the definition of an HMO. At the end of March 2019 there were over 15,600 licences in force and 87% of these were accounted for by the four major cities and the Fife local authority (Aberdeen, Dundee, Edinburgh and Glasgow). Edinburgh accounts for almost two in five of Scotland’s HMO licences due to its higher rents, large student population, tourist lets and young professionals sharing. HMO investment HMOs are popular with buy-to-let investors because, it is believed, they have higher income-generating potential than ordinary or ‘vanilla’ buy-to-let properties. By splitting single properties into multiple bedsits that are each let out on separate tenancy agreements, landlords can also reduce their exposure to loss of earnings through rental arrears or voids. While HMOs may generate higher income, HMO investments, at least in heavily regulated Scotland, entail significantly higher initial costs if compared with regular buy-to-let properties due to significant costs of licensing, safety checks and certificates, fireproofing, alarms, joinery and other required remedials. Controversy Some argue that HMO investment is necessitated by insufficient housing supply in the UK, whilst others argue that it is exploiting it. Finance Due to the additional legal requirements placed upon HMO landlords, many buy-to-let mortgage lenders refuse to finance HMO properties. This has led to the emergence of a specialised HMO mortgage market, catered for by a smaller subset of lenders. Because the choice of products is narrower, HMO mortgage borrowers are often subject to stricter criteria. Often they need larger cash deposits, as the average loan-to-value ratio is slightly lower than for an ordinary buy-to-let mortgage, while the minimum property value tends to be higher. Borrowers who are financing unlicensed HMOs may also be required to prove that their local authority has no intention to license the property in the future. It is also common for HMO mortgage lenders to levy stipulations on various aspects of the property, including the number of