Why use specialist lenders and conveyancers for HMOs?

Focusing on HMO licensing, which varies by local council, this property type presents both challenges and opportunities for lenders, intermediaries and landlords alike. They often produce higher yields compared to standard buy-to-let investments, making them increasingly popular with landlords looking to diversify their portfolios. However, the increased complexity of HMO regulations and the need for compliance with local licensing schemes create significant hurdles.

HMO licensing changes has seen some councils adopt a more aggressive approach, both in enforcing existing rules and in expanding licensing requirements to smaller properties. These changes mean that councils are focusing on paperwork and also interacting directly with tenants to ensure compliance.

With over 160 laws governing buy-to-let (BTL) properties and over 400 regulations to navigate, standard mortgage solutions often fall short when dealing with HMOs. Lenders who have the underwriting capability to assess these cases individually and offer a range of products tailored to the specific needs of landlords are essential because they provide the expertise and flexibility required.

By working with specialist lenders, brokers can offer their clients access to products that address the unique risks and opportunities presented by HMOs.

In summary, by engaging with specialists early in the process, brokers can navigate the complexities of HMO licensing, compliance, and financing with greater ease, while offering their clients tailored solutions that meet their specific needs. Looking forward, HMO opportunities will become increasingly prominent and those who leverage this specialist expertise will be well-positioned to capitalise on them.

This article was originally published in Financial Reporter

For intermediaries only