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  • Buy-to-Let

    Refused due to suspected HMO

    Strange situation I am undergoing, purchasing a 3 bedroom standard BTL for single let. The lender's valuer reported the property as a HMO (apparently there were 2 separate family living there now) and the lender refuse to approve the mortgage due to the valuer report of it being a HMO.

    The vendor confirms it is not a HMO and produced an AST to evidence it.

    I spoken to my broker and surprised to be told that the lender is not having any of it and classified it as a HMO even though there is no special adaptation for HMO (standard 3 bedroom terrace), it is not being used as a HMO currently and on top of that, the property will be completed with vacant possession and I will only be doing single let on it.

    Apart from having more delay and applying to another lender, is there anything else I can do? Just felt a little silly the lender being so unreasonable with it.

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    Who is the lender? More than likely you will have to challenge the valuer but it’s easier to go to another lender and explain upfront

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    Ask your local council who control the licence and check their policy on HMO.

    Is the property decided into two flats or are the two families living in one property sharing the facilities like kitchen and any communal area etc.

    What was the reason the valour classified it as a HMO ir he just did without any explanation.

    And yes I would try another lender.

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    I had the same, they said it felt like it could be used as an HMO so wouldn't touch it. They won't change their minds trust me, his say is final.

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    If the valuer went in there after it being vacant first, there will be no issue of HMO. Just strange as it will be completed with vacant possession.

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    Did the valuer speak to the occupants and perhaps was given the impression by them they would be staying after completion.

    How many people are living there and if it is more than one family why do you think it is not an HMO - but perhaps not one that needs a license.

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    I was given the impression of 1 family 5 people living there.

    But it will be vacant possession anyway. And I have a copy of the current AST to evidence it.

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    "I spoken to my broker and surprised to be told that the lender is not having any of it" ~JLASSET

    You will find it rare that a lender would go-against the valuers decision.
    There are structural reasons why they dont on a grander scale, that they can not be seen to interfere or second guess surveyors.

    "is there anything else I can do?"  ~JLASSET

    Not really with the same lender, you can ask the lender if they will complete if you obtain vacant possession. Given the valuers comments, perhaps not.

    "silly the lender being so unreasonable with it."  ~JLASSET

    Oh. I've seen worse, i've seen valuers make similar comments just because it was a "HMO Area". 
    It always seem silly when they cant listen to a reasonable argument. 

    "Apart from having more delay and applying to another lender" ~JLASSET

    Your adviser is right, always worth a call to the lender. Though he could ask how it may be resolved, such as vacant possession.
    Alternatively look at other lenders, though worry that they come with the same comments. Given the tenure of the property.

    "Ask your local council who control the licence" ~Singhno1

    A property can be a HMO without being a licensable HMO. Lender wouldn't be bothered what council says.

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    _________________________________________________________________________


    My posts are not financial advice, just a rambling guy passing time on a coffee break.
    The team at Bespoke Finance offers advice, including Limited Company Buy-to-Let , HMO Conversion and Cheap Life Insurance.

    _________________________________________________________________________


    Thanks for the input.

    Just felt it is a factual inaccuracy and not challenging an opinion.

    Anyway, life goes on.

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