BIZL

Commercial Finance Specialists

Conversion to HMO

Purchase of a residential property to be converted into a licenced House in Multiple Occupancy (HMO)

Sector

Residential property investment

Location

Surrey

Purpose

Property purchase

Scenario

Our client was looking to purchase a large 6 bedroom residential property in Addlestone, Surrey. His plan was to complete on the purchase, install fire doors and fire alarms, apply for a HMO licence and then let out as a House in Multiple Occupancy (HMO).

Problem

Our property investor client had got to an advanced stage with another broker and lender, having had the valuation carried out and a full offer back. However, the lender offer was lower than required as the property was valued and assessed as a standard buy to let. Rather than viewing the property as a HMO with higher rents, the property was viewed in its current format. The market rent was therefore not strong enough to support the required debt amount.

Solution

Having successfully helped clients with this scenario before, BIZL quickly placed the application with a lender who would value and assess the property as a HMO. Our lender allowed completion of the purchase with a condition to obtain a HMO licence within 90 days of purchase. This pragmatic approach allowed our client to raise 70% loan to value for the purchase.

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