Landlords may need to refinance for HMO changes
New regulations that start in October 2018 affect houses of multiple occupancy (HMO).
The new regulations introduce minimum bedroom sizes which must be at least 6.51 square metres for single rooms, and 10.22 square metres for double bedrooms. Bedrooms occupied by children aged 10 years or younger must be a minimum of 4.64 square metres.
There are also regulations about fire exits and regular mandatory safety checks.
More properties are being classed as HMO. Any property being rented by five or more people from different households must have an HMO licence. Blocks with two or more purpose-built flats will be classified as HMO.
Landlords that fail to meet HMO standards or do not obtain a license for them face heavy fines. Many landlords will have to spend money on upgrading their property. Providing there is enough equity in the property remortgaging can provide the funds for upgrade work.
To make property conform to the new regulations, dividing walls may need to be demolished to make two small rooms into one larger one. Fire doors may need to be added to the property.
If an HMO property has one or more bedrooms that are below the minimum size, lenders will assess the mortgage affordability only on the rental income from the rooms that are the correct size. This could result in a commercial mortgage application being turned down.
A mortgage broker will find the best mortgage and remortgaging deals to enable landlords to conform to the new HMO rules.