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  • HMO & Multi-Lets

    Buy to let changed to HMO!

    Hi everyone,

    I've been renting a property out to a family and one of their friends for the last 2 years. The council have just told me that I should have applied for an HMO licence for the property as it now fits under new HMO rules. The problem is, that I remortgaged the property as a single let mortgage, but this was before the new rules were put into place. 

    I'm in a bit of a catch 22 as The council are demanding I apply ASAP, the mortgage company I have would need to be notified and would apparently not allow me to switch from single let to HMO without first terminating the initial contract, which would lead to having to pay a huge early repayment charge! (£16k!) Plus then be on much higher interest! The tenancy contract is up so I was planning on serving them their notice ASAP, but apparently it isn't that easy according to the council man! I couldn't quite understand why! 

    If it is easy enough to evict the tenants, do you think the mortgage company will be lenient at all? If I say it was an honest mistake and wasn't aware changes had happened! Also technically the HMO application takes 3 months so I could potentially keep it quiet and just say I was planning on changing the house to an HMO after the tenants left, but then changed my mind! Just thinking of any way to avoid pay a huge bill!

    Any thoughts greatly appreciated

    Thanks

    James

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    You are confusing HMOs and licensable HMOs. This property has been an HMO from the start because it is let to 2 separate households.

    It was not licensable until recently but it was always an HMO and so you have probably been in breach of your mortgage throughout.

    You could try asking the LHA for a temporary exemption from licensing and you are right that the mortgage company may actually be pretty calm about things if you are sorting it out.
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    David Smith
    Landlord & Tenant Solicitor
    Anthony Gold Solicitors

    Find me on LinkedIn: uk.linkedin.com/in/dsnsmith

    All opinions are my own and do not reflect those of my firm. No comment made should be taken as legal advice and you should consult a solicitor or other legal professional for advice on your specific situation.

    Noob Question: Would mortgage companies say you are in breach if renting out to 3 unrelated individuals, on a single ASTs even if that does not fall under a license-able HMO in the local council.

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    It is an HMO so if your mortgage says no HMOs then you are in breach in the situation in your post. If I was your mortgage company, I would say you are in breach. If I meant no licensable HMOs then that is the condition I would put in the mortgage.

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