HMO Mortgage

HMO Conversion

What comes first the HMO Mortgage or the HMO Conversion to get an HMO Licence? the answer is the conversion.  You may not need to convert the property if it is a small HMO if only decorating needed. 

You can only get an HMO Mortgage when the property is in a rentable condition. This means tenants are able to move into the property within days of completion.


If you need to change the room layouts or create extra bathrooms. You will need to do this conversion prior to getting an HMO Mortgage.


It's typically not a problem on remortgaging an HMO.

HMO Bridge-to-Let Finance

With HMO Conversion our Bridge-to-Let mortgage offers yout he best of both worlds. The flexibility of bridging finance with the security of long-term mortgage. Once the property is refurbished.

  • No Repayments whilst works are being compleated.
  • Guaranteed Exit after works compleated onto a Buy to Let Mortgage.
    (T&C Apply)
  • Lock In todays mortgage rates for in six months.
The Process
  1. Application
  2. Initial Valuation
  3. Two Offers (Bridge & Buy to Let)
  4. Purchase with Bridge
  5. Convert
  6. Re-Inspection Valuation
  7. Remortgage to HMO Rates

Conversion into HMO, Whats required?

Conversion into an HMO will require substantial work:


You will want to establish a Schedule of Works. What needs to be done, when and the estimated cost. To ensure you are off to a good start and furnish a valuer with prior to conversion to understand the end goal.

The more works you need to do will increase your HMO Conversion Costs.


Do you need planning permission to convert a property into a HMO?

If you are creating a small HMO (up to six tenants) then you typically dont require Planning Permission.  This is known as "Permitted Development Rights".


Unfortunately, not all councils are the same. In some council areas, they have an "Article 4 Direction". This can require the conversion of a C3 House to C4 HMO to require planning permission.


In addition, many structural changes to a property will require Planning Permission, HMO or otherwise. This is why it is recommended you talk to a Local Planning Consultant to determine if planning is required or not.


Can I get packaged bridge-to-term mortgage?

Yes. We have mortgage lenders that will offer you the short-term bridge and the exit onto term finance with them.


The benefit of such an arrangement is that the HMO Mortgage is guaranteed. As long as you make no significant changes to the plans during the conversion. You will also get two valuations, the current value and the estimated end valuation after conversion.


Is Bridging Finance Expensive?

It is. If you do not want to pay the interest on short-term bridging finance to convert the property. Stick to renting the property as a single-let.


The expense is a means to an end. It gets you to the final goal of owning a House of Multiple Occupation (HMO). In business, you would think of this as a sunken investment.


You can lower the cost of Bridging Finance by obtaining a low loan to value loan. Having a large deposit will help you keep down the mortgage costs.


The quicker you can convert the property into an HMO, the quicker you can exit onto an HMO Mortgage. On a six month bridge, completing the conversion in two months. Will get you the remaining month's interest refunded.


How long will a HMO Conversion take?

The duration to convert a residential property into an HMO Property depends on what you start with. You may need to change the room layout, ensuring rooms meet the minimum sizes. This can take up significant time.


The property may only need new fire-doors and fire alarm systems and basic tidying up. This can be completed quickly if you have a team ready to go.


Cash Purchase or Short-Term Finance is required to convert the property. You will typically take out bridging finance for six months. Though with a good mortgage adviser and you prepared, you can exit the short term finance earlier.


Whilst you initially pay the six months interest on the short-term mortgage upfront. If you exit the mortgage within 2 months. You can typically expect a refund of the remaining 4 months interest.


When is an HMO licence required?

There are two types of HMO Licences: National Licensing and Selective Licensing. Neither should be confused with HMO Planning Permission.


Selective HMO Licensing is where a council selects an area of the city. Properties in this area will have to obtain a licence from the council. Each council differs, so check with yours.


National Mandatory HMO Licensing is much more simple. You will be required to have an HMO Licence if the property is rented out by 5 or more people.


... read more on When is an HMO licence required?

What are HMO minimum room sizes?

New Regulations in 2018 set out national minimum room sizes for Houses in Multiple Occupation (HMO). The room sizes originally were set by your local authority. 

The new requirement for HMO Licences issued after 1 October is that:


... read more on What are HMO minimum room sizes?

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