8 Bed HMO and Accompanying Land Purchase 

​The Scenario

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An existing client of ours who was a portfolio landlord had found an off market large HMO property with adjacent land with planning permission for 2 block of flats consisting of 3 x 1 bed flats to be built next to the existing HMO for a great price. He came back to SFS to consult us on the potential ability to purchase this property as it would add into a growing portfolio and into a sector in which the client had not yet entered being HMO.​

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However, this posed 2 problems.

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1. HMO does pose some issues for those not versed in it and lenders can be hesitant to give the lending to those even with property experience if their first HMO is to be one larger than 5 bedrooms.

2. The land next to the property having planning permission and the current owner selling the land and property at once expecting the value of the land to be purchased via mortgage also. Many lenders will not allow the land to be used for valuation purposes as this land only has value when it is expected to be built upon which with many lenders they do not want happening during their ownership of the plot.

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The Solution​

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After extensive research and restructuring of the deal, there became a solution that fit the client, seller, and lender. 

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• The titles of the land and the property were to be split upon completion giving lenders security over just the property, allowing lender to not have any problems to their security of the main HMO.

• The buyer used a specialist lender who allowed a new HMO landlord to secure large HMO mortgages as they had previous experience. 

• The land purchase completed via bridging finance to secure finance to purchase the property as well as fund the building cost of the property 

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