HMO Investment Dilemma – READERS QUESTIONMake Text Bigger
Leamington Spa based landlord Steve Gibson has asked us to post the following HMO Investment Dilemma.
“I live in Leamington Spa which is a popular location to rent for students of University of Warwick. As a pension investment my wife and I have recently started looking at purchasing a house to let to students. On investigating further it appears Warwick District Council has removed change of use from Dwelling House (C3) to House of Multiple Occupation (C4) from permitted development as of April 2012. As a consequence planning permission is now required.
I have approached the department responsible for developing the policy to be applied to such applications and at present one doesn’t exist. However planning permission is required and can be refused on grounds such as (but not limited to) insufficient parking, insufficient storage space for refuse, high existing population of HMOs in the near vicinity and the reaction of neighbours to the proposed change.
From a property investor’s perspective this now makes the decision to invest a much more difficult one as it is not possible to get a definitive determination prior to purchasing a property. As student lets provide a higher rate of return and given the price of property in the area is relatively high, the ability to pursue this option is a significant deciding factor in pursuing property investment.
My question is have you experienced this approach by councils in other areas of the country? It potentially limits investment in a housing sector for which there is significant and increasing demand.
One more thing I will add is that having approached around seven estate agents and telling them what we were looking to do only one of them offered to share this fact with us! Hence I suspect there may be a few investors in my area with similar intentions who may get a shock after a purchase has been made! Worse still they may plough on in blissful ignorance and end up in a very awkward position with the council after they have a signed tenancy agreement in their hands.
Any feedback you can offer on the legitimacy of the local council’s approach would be appreciated.
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