Shelter’s Income and expenditure figures highlighted13:57 PM, 4th February 2019
About 2 weeks ago 35
I have a portfolio of 15 houses in North London. The local council has just introduced additional HMO licensing whereby small HMOs like mine (i.e 3 or 4 sharers in a 2 storey house) will need to be licensed.
I purchased my properties all using normal BTL mortgages and the problem I have is that if I continue to rent the houses as I am doing to small sharers, I will be in breach of the HMO law and could face a large fine of to £25K. However if I do the work to make it a HMO and apply for a HMO license, this will inform my existing mortgage lender and I will be in a breach of mortgage, due to the council writing to my lender advising them that a license has been applied for. So I am stuck as what to do with my portfolio now…
I understand that most HMO lenders lend only on properties whereby there is a licence in place, but you cannot get a licence until the work is done and applied for through the council, so there seems to always be a point where you are in breach with someone. Catch 22.
I therefore see no option but to continue to rent my properties as is which are now illegal or sell up and buy flats.
Is anyone else in this situation?
Any advice would be very much appreciated as to how to proceed from here..?
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