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MORTGAGES

HMO’s & MUFB

HMOs

HMO stands for “House in Multiple Occupation”. These types of properties have become increasingly popular in recent years due to the potential for increased rental yield. Given the increase in popularity with landlords, more and more lenders have brought product offerings to the market to keep up with the demand.

A HMO is a property rented out to at least 3 people who are not from the same household but share facilities in the building like the bathroom and the kitchen. A good example of this is a student house share. Most HMO’s have been subdivided from larger houses designed for and occupied by one family.

Pros of HMOs

  • Potential for higher rental yields
  • Less impact for void periods
  • Less exposure to rent arrears
  • Strong demand in the right areas
  • Greater opportunity for capital growth
  • You can attract a range of tenants including students
  • Interest only lending available at 75% loan to value

Cons of HMOs

  • Void periods between students
  • Sometimes harder to get lending – experience maybe required
  • Increased regulation
  • Smaller choice of lenders
  • HMO license is needed

MUFBs

MUFB stands for – Multi-Unit Freehold Block. A MUFB is a number of properties that are all on one freehold title. This could relate to a block of flats or a row of terraced house. Each property on the title needs to be self-contained and can be rented out to different tenants. You would normally expect each property to have independent services such as utilities.

The key difference between a MUFB and an HMO is that each unit is self-contained with its own private entrance and separate AST (Assured Shorthold Tenancy), as opposed to an HMO property with shared kitchen, bathroom and communal area.

Pros of MUFBs

  • Less impact from void periods
  • Less impact from void periods
  • Less exposure to rent arrears
  • Strong demand in the right areas
  • Greater opportunity for capital growth
  • Interest only lending available

Cons of MUFBs

  • Sometimes harder to get lending – experience maybe required
  • Smaller choice of lenders compared with HMOs

ANY PROPERTY USED AS SECURITY, INCLUDING YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT. COMMERCIAL MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY OR THE PRUDENTIAL REGULATION AUTHORITY.

To speak to one of our experienced mortgage advisers today about shared equity or shared ownership mortgages

Call FFP today on

01745 530020

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