Your Business and Industry
Overcoming challenges with HMO cases
As landlords increasingly turn to HMOs to maximise rental yields and help mitigate risk exposure across their portfolios, it’s no surprise that we, and our intermediary partners, are seeing an uplift in this type of business.
As a lender with experience working with HMOs, we’re comfortable discussing this on any level. However, we also appreciate the challenges for intermediaries and their clients, especially if requirements are incorrectly met.
One of the main drawbacks is miscommunication around property classification and licensing requirements. Many converted HMO cases focus on whether a licence can be secured within 90 days of completion or needs to be in place before an offer is issued and clarity will be needed on the property’s current use.
For example, is the property operating as an HMO, or is it a single dwelling being converted? If brokers fail to flag this early, such as incorrectly selecting the property’s status in lender portals, underwriters may discover discrepancies later in the valuation process. This can lead to delays or revised lending decisions.
To avoid this, brokers should ensure that the following aspects are documented upfront:
- Fire safety compliance – Confirming the property meets HMO fire regulations can prevent post-valuation issues.
- Room sizes and layout – Some properties won’t qualify if rooms fall below minimum size requirements.
- Planning permission and licensing – Ensuring the correct permissions are in place before submission speeds up approvals.
Uploading supporting documents, including notes from discussions between brokers, landlords, and BDMs, helps underwriters take a proactive rather than a reactive approach. This accelerates processing times and reduces the risk of surprises post-valuation.
Our recently introduced HMO Plus product range is designed to support landlords with complex property types that may not fit standard lender criteria. It includes accepting first-time landlords for HMO products, offering commercial valuations for small, complex HMOs, and providing greater flexibility in financing more significant HMO investments. By expanding these options, landlords can confidently diversify their portfolios and explore a broader range of HMO opportunities.
*This article was originally published on Financial Reporter
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