Finding solutions for complex buy-to-let - Mar 04, 2019

As the myriad of changes that have impacted the buy-to-let sector in recent years are being experienced by landlords, some are looking at different property types to maximise their investment returns. Changes to buy-to-let taxation have affected potential profits for landlords and lenders are using stricter rental calculations to determine affordability. Some landlords have turned to Houses in Multiple Occupation (HMOs) or Multi-Unit Blocks (MUBs) for greater rental yield and portfolio growth.


Houses in Multiple Occupation have always been a popular choice with professional landlords looking to increase their rental yields due to the potential provided by having multiple paying tenants. At TBMC we deal with HMO enquiries on a daily basis and we have around 25 different lenders on our panel who consider this property type.

Dealing with complex buy-to-let cases can be rewarding for intermediaries and they can be quite straightforward to place.However, there are a number of factors that always come into consideration when handling HMO applications. TBMC’s experts place these cases every day so here are our top tips for sourcing HMO mortgages:

1. ASTs

Check the number of ASTs your client has in place with their HMO tenants. Some lenders accept multiple ASTs and others will only accept one.

2. Facilities

Most lenders will only expect to see one kitchen and one living room in a HMO. If the property has more you may need to source specialist lenders.

3. Tenant Type

Your client's HMO might have a specific tenant type. Check criteria for DSS tenants, students and vulnerable tenants.

4. No. of rooms and size

HMO lenders have criteria on how many bedrooms they will accept in the property. TBMC works with lenders ranging from a maximum of 4 bedrooms to those with no limit at all. Checking minimum room sizes is also important as new HMO regulations stipulate a minimum of 6.51 square metres for an adult bedroom.

5. HMO licensing

Check your client's HMO property is correctly licensed. Properties with 5 or more bedrooms, occupied by more than 1 household, who are sharing facilities will (as of October 2018) need to be a licensed with the local authority. Lenders will need the appropriate licences in place before completion. 

Multi-Unit Blocks

Multi-Unit Blocks have also been amongst the most enquired about property types every week since the new year here at TBMC.

Almost exclusively accessible to experienced landlords, MUBs can be valuable assets to portfolios, significantly enhancing profits and helping landlords develop into full time investors. 

For tenants seeking city centre locations and amenities for modern living, MUBs might be a solution for rental demand and perhaps a key feature of the investing market.

TBMC’s experts place cases daily for Multi-Unit Blocks,so here are our top tips for sourcing:

1. Individual units

Most lenders will require each unit in the block to be individually saleable.

To know what the lenders are looking for let’s break this down into more detail:

- Separate utilities

Each unit must have its own gas,electric and water supply.

- Separate entrances

Each unit must have its own secure entrance be that inside or outside.

- Separate facilities

Each unit might be required to have its own living space, kitchen and bathroom.

2. Unit size

Check the individual units' square footage. Lenders will have a minimum each needs to meet. Exceptions for smaller units can be made where the majority of units meet criteria. TBMC has placed an MUB with one unit at 19 square metres before.

3. Experience

Your client will typically need letting experience when purchasing their first multi-unit block. The average minimum requirement is 2 years' landlord experience.

It is interesting to see the changes in buy-to-let investment strategy as landlords look to find ways of maximising their investment potential and how lenders are developing their appetites for more complex buy-to-let business.


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