HMOs – Why is there so much confusion?

Stephen Todd

Chief Commercial Officer of VAS Valuation Group

Video Transcript

HMOs do cause a lot of confusion between lenders, brokers and even valuers. And this comes down to sort of three main reasons. Planning use, if the property’s got a licence, and comes down to the lender’s own specific valuation guidelines. A traditional house has a C3 planning use. Under permitted development rights, a landlord can apply for a small HMO licence for three to six occupiers. However, if the council has designated that area under the Article 4 direction, the landlord has to seek permission from the council to get C4 use. Over seven occupiers requires specific sui generis use. Lender’s instructions as well are different for every lender.

 

A broker needs to work with the lender to really understand specific requirements for HMO valuations.

 

So, I would really recommend that a broker works hard with the lender to understand their specific requirements for HMO valuations. We would recommend that all information is provided to the valuer at the outset of the instruction, including planning use and licensing information, and hopefully this could help reduce any friction in the valuation process and no surprises at the end of the valuation.

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