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Hope someone can help, I’m looking to purchase a 4 bed property which is in a selective licensing area, are most of the major mainstream Lenders ok with this as so many selective license areas around or is it specialist lending?
Also, the house is currently run as a 5 person HMO and is licensed as such, apart from fire alarms and doors, nothing else has been converted.When the house is sold it will as a vacant possession, should I be telling the lender that it was HMO or is it likely to complicate matters?.I assume the previous landlords hmo license will lapse when he sells and I’ll need to apply for a new selective license which will allow for a single let...or is it more complicated?
The figures don’t add up for a HMO, certainly the extra is not worth the hassle, hence rather keep it as a single let.Many thanks
Lenders are interested in the property but will rely on a valued to make comments where necessary. Your broker should know how to deal with lenders so be upfront with him.
Lenders will want to know about you and your plans. How the former used the property is rarely relevant.
Give me a shout if you need any help.
Chartered Accountant, Tax Advisor and Mortgage broker
(and BTL portfolio owner)
Thanks for the info Stuart, just thought it might not be relevant to mention as the property will be vacant when sold, however I could see a lender thinking I’m after a normal BTL mortgage and then using it as a hmo, which I’m certainly not. It’s best they know beforehand, was just trying to speed up the process.
Hopefully most lenders are ok with selective licensing as it’s so common now, I’m sure my broker will know who to avoid. Thanks for your offer of help.
Valuers will look for locks on doors and other signs it's set up for HMO (bedrooms in lounge areas), but this is a purchase and you are entitled to change this back to a single let. If lenders see the rest of your portfolio and all of your other properties are HMO - then they may be less inclined to believe the switch Much of today's lending is around 'plausibility' . There will be a number of previous HMO's being converted back to single let as they don't quite meet the new rules etc so you won't be the only applicant putting in for finance on a property that was a HMO and now will not be. I think you should be fine.
Hope it goes smoothly
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