Area size requirement for mortgage purposes

by Readers Question

4 years ago

Area size requirement for mortgage purposes

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Area size requirement for mortgage purposes

What are the permitted overall area sizes of a studio or 1 bed flat to get an individual mortgage via a mortgage lender? Area size requirement for mortgage purposes

Thinking of student pod sizes but not for students.

Thanks

Kathy



Comments

Mark Alexander

4 years ago

Hi Kathy

It is highly unusual to be able to secure finance on a student pod. This isn't just because of size but other factors such as restrictive planning covenants and shared facilities are also factored into the equation.

It might be easier for the mortgage brokers who visit Property118 to answer your question if you can be more specific about what you have in mind.
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Yvette Newbury

4 years ago

Funnily enough I had a similar query recently and spoke to a broker who advised 30 sq meters is the usual minimum for a studio, but that once they had managed to arrange finance for a studio that was only 22 sqm, but that was in Kensington, London. For small sizes I was informed that they will work out your affordability based on 190% coverage of the rent, at a repayment interest rate of 4.5% over 15 years. However this was for buy to let, if you were buying to occupy yourself you may do better.

KATHY MILLER

4 years ago

Hi

No its the layout I like of the student pods, thinking more of house conversion into
something like student pods (studio) for rent. Much like a 1 bed flat but smaller so cheaper for tenants to rent and heat.
If a house was converted into say 3 studios then if I split them would I be able to get individual mortgages. They would be about 20sqm it I could get the planning.

Mark Alexander

4 years ago

Reply to the comment left by "KATHY MILLER" at "06/06/2014 - 06:44":

Hi Kathy

I suspect it will be impossible to obtain individual mortgages on such properties. I have to ask though, why would you want to? What you have described here is an HMO, albeit possibly not a licensable one depending on where it is. HMO finance is available up to 85% LTV - see >>> http://www.property118.com/hmo-finance-85-ltv/66063/
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4 years ago

Hi Kathy,

As Mark says, you are essentially describing an HMO.

You might consider a more commercial financing route of turning an old pub or small office block into these "pod" type units.

I am not sure if you saw it, but there was an article in the paper only yesterday about a "shoe box" studio flat in London and it appears that the landlord had done what you are proposing, but, in this case, the results were not what I would call positive ....

http://www.theguardian.com/money/2014/jun/05/tiny-apartment-taken-off-the-market-by-islington-borough-council

KATHY MILLER

4 years ago

Hi Vanessa

That studio was tiny! I wouldnt attempt to rent anything like that.
Its just something better than rooms but cheaper than a 1 bed flat, which I think there is a need for.

I have never done an HMO the council tax people seem to want to charge council tax on a room if its got a lock and a separate tenancy . This seems to defeat the object of rooms providing a cheaper level of accomodation.

4 years ago

Hi Kathy,

I wasn't for one moment suggesting that you would offer that type of product!! It was just in my mind from yesterday.

I agree that there could be a need for a high standard studio pod type accommodation.

With regards to council tax and HMO's, specialist HMO lawyer David Smith answered that very question on Property Tribes a matter of days ago:

http://www.propertytribes.com/council-tax-implications-on-separate-rooms-t-11382.html

Hope that helps?

Neil Patterson

4 years ago

Back in the old days up to 2010 when I was helping develop a bespoke BTL sourcing system the most common criteria was 25 square metres.

However the larger the area the more options will be available and I have seen 30 and 35 as a minimum criteria also. Many lenders will not consider studio flats on any basis though.

It all depends on value, LTV required, area and rental income. The better the quality the more likely the finance, but it may need to be more specialist commercial.

To know for certain and source a lender we would need to do a full fact find which would take 30mins at least.

KATHY MILLER

4 years ago

Hi Vanessa,

No I didnt think you were , I was just stating I wouldnt.

That was interesting reading from David Smith.

I have seen many HMO around Birmingham area completely self contained but the
council are happy with one council tax for whole of property.

So I think it depends on how hot the council tax dept is in the area your in.

Thanks Mark I think if I converted lst floor into self contained flat then this would be
a standard mortgage as area size would be fine.

If I converted the ground floor into two completely separate studios then it wouldnt be an HMO. Would the only option be an HMO mortgage?

Thanks Kathy

Mark Alexander

4 years ago

Reply to the comment left by "KATHY MILLER" at "06/06/2014 - 09:46":

Probably.
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