Remortgaging a property after adding an extension

by Readers Question

10:06 AM, 26th September 2014
About 4 years ago

Remortgaging a property after adding an extension

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Remortgaging a property after adding an extension

I am looking to remortgage a BTL property for the first time, which has been renovated. The outbuilding was converted to a sunroom/lounge and have added a shower/WC which is under the permitted development specs. Remortgaging a property after adding an extension

The house has 5 beds but only 2 floors, apparently some lenders specify that if there are 5 occupants it will be classed as an HMO and would need the Council’s confirmation to the contrary before they can lend.

I am seeking recommendations about the pros and cons of remortgaging a property of this kind as I have no experience so far.

Any suggestions of lenders who will be prepared to lend as a standard BTL would be greatly appreciated.

Many thanks

Lali



Comments

Howard Reuben CeMap CeRER

10:24 AM, 26th September 2014
About 4 years ago

Although most councils licence HMO's, not all do. The definition of an HMO is also subjective and, once again, some councils will perceive a 2 storey building to still be classed as an HMO and some don't. Some will require all tenants on a single AST, some don't. etc.

Then we have the issue of the 'home improvements'. As long as they are within permitted regulations and boundary rules, as well as the usual 'right to light' and PP guidelines, then any new mortgage lender (and the conveyancer) will not have an issue with that either.

Of course, these are just two of the factors taken in to consideration (i.e. whether an HMO, and whether build is within regulations) although of course there are other factors, including your own credit status, rental income calculation, location desirability, HMO experience, etc etc etc that also need to pass the new mortgage lenders criteria test.

Where to start? Work with a professional mortgage adviser who knows the market and can guide you accordingly. My Property118 profile provides links to our team of experienced Advisers who could possibly assist.

Hope that helps

Howard

Renovate To let

11:51 AM, 27th September 2014
About 4 years ago

Just a couple of comments from me.

Firstly, permitted development is planning only - you still need building control completion certificates before you can effectively insure the buiding (most insurers have the need for such certification in their small print).

Second, HMO definition is objective, not subjective. Mandatory licence HMOs are defined by the housing act and then Additional Licencing allows for a local authority to bring smaller HMOs within Licencing too - in a defined and documented way (3 or more people forming 2 or more households etc). There is an element of leeway in what the HMO officers will ask for in each case - for example 'solid' doors versus fire doors.

Then there is the thorny issue of 'material change of use' where Building Control can insist on substantial upgrades to the building in certain circumstances - this part is within the building regulation documents but inconsistently applied. Where more than 6 people will be accommodated and therefore Sui Generis planning is needed, building control are far more likely to try to insist of sound deadening, fire compartments etc etc (as the buidling is no longer classed as residential).

Howard Reuben CeMap CeRER

16:20 PM, 28th September 2014
About 4 years ago

Reply to the comment left by "Renovate To let" at "27/09/2014 - 11:51":

“Second, HMO definition is objective, not subjective.”

If only it were that simple, Renovate To Let.

Did you know that councils can make up their own minds as to what is determined as an HMO?

Oxford, for example, states “Which Properties Require a HMO Licence; The requirement to obtain an HMO Licence in Oxford is not the same as in most other parts of England.” !!

(http://www.oxford.gov.uk/PageRender/decH/WhentoApplyforaHMOLicence.htm)

And then there is Nottingham who prescribes to the full Additional Licensing structure every time, and then there's Manchester who publicly state “We may use the discretionary powers contained within Parts 2 and 3 of the Housing Act 2004 to designate areas for Selective Licensing and Additional HMO Licensing. ” etc etc.

These are just a very few examples of how councils vary and differ, all in today's marketplace.

This is clearly therefore not a ‘set in stone’ objective implementation ….. if only.

So, whereas I am not arguing your point that HMO licencing is set in law and therefore there is an objective 'starting point', the real world activities from council to council vary so greatly (and we are highly active in this sector as we arrange HMO finance for many Clients throughout the UK) and so the term ‘subjective’ even seems generous when trying to assess councils interpretations on a daily basis!

Renovate To let

17:00 PM, 29th September 2014
About 4 years ago

Howard, the Oxford doc you linked uses the totally standard definition of what constitutes an HMO. Additional Licencing bring these 'small HMOs' in alongside the larger mandatory licensed HMOs in more and more areas. The council has lots of leeway in defining what facilities must be provided within these HMOs and any landlord worth their salt would have a copy of the licence requirements as part of his DD before shortlisting a property.

Howard Reuben CeMap CeRER

17:26 PM, 29th September 2014
About 4 years ago

Reply to the comment left by "Renovate To let" at "29/09/2014 - 17:00":

"any landlord worth their salt would have a copy of the licence requirements as part of his DD before shortlisting a property." correct, and I absolutely agree

"The council has lots of leeway in defining what facilities must be provided " hence my point (which this exemplifies) that it is not absolutely 'black and white' and albeit that HMO licencing is set in law and therefore there is an objective ‘starting point’, the real world activities from council to council vary so greatly

Joe Bloggs

17:21 PM, 30th September 2014
About 4 years ago

Reply to the comment left by "Howard Reuben" at "26/09/2014 - 10:24":

howard you stated:
'The definition of an HMO is also subjective and, once again, some councils will perceive a 2 storey building to still be classed as an HMO and some don’t.'
the definition can be variable according to the location, but it is not 'subjective'. the use of that word gives completely the wrong impression.

Howard Reuben CeMap CeRER

17:48 PM, 30th September 2014
About 4 years ago

Reply to the comment left by "Joe Bloggs" at "30/09/2014 - 17:21":

I refer to my comment above .... " hence my point (which this exemplifies) that it is not absolutely ‘black and white’ and albeit that HMO licencing is set in law and therefore there is an objective ‘starting point’, the real world activities from council to council vary so greatly "

Joe Bloggs

18:06 PM, 30th September 2014
About 4 years ago

yes, i noticed you demurred from your initial assertion. the definition is black and white. the fact that some councils have introduced additional licensing in addition to mandatory does not make the 'The definition of an HMO... subjective'.

Howard Reuben CeMap CeRER

20:15 PM, 30th September 2014
About 4 years ago

Reply to the comment left by "Joe Bloggs" at "30/09/2014 - 18:06":

Blimey Joe. Are you trying to give me a lesson in grammar? Trust me when I TELL you that the numerous council officials that I have dealt with over the years on behalf of my professional HMO investor Clients (who have properties throughout the UK including Scotland) that my experience is as I have described. You may wish to endeavour to assert some sort of literal supremacy over people posting here, however back in the real world (where I am not only quite literal too - that's what a Grammar School education did for me!) but I am also heavily involved on a daily basis with UK councils re HMO licencing and their 'subjective' interpretations on how to implement the rules.

I note from your profile that over the past 12 years you have been contentious and so, quite obviously therefore, you may (and most likely will) want to post a retort, however this will be my last on this particular subject of 'definition'.

Joe Bloggs

21:40 PM, 30th September 2014
About 4 years ago

Reply to the comment left by "Howard Reuben" at "30/09/2014 - 20:15":

'grammar'??????
arranging mortgages clearly does not make you knowledgeable on HMO definitions.
i find that when someone says something is subjective when it shouldnt be, they often havent taken the trouble to understand it.
well done for passing the 11 plus!

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