You are here: Home - News -

HMO calming measures must ‘strike a careful balance’

by:
  • 13/07/2017
  • 0
Local authorities imposing restrictions on the number of Houses in Multiple Occupation (HMO) which can be set up in a given area must be careful to strike the right balance, industry experts caution.

The warning was sounded following the news that Bath and North East Somerset Council revealed plans to increase its controls over the number of HMOs in the city.

Local authorities have been granted powers to restrict the volumes of HMOs or request additional licensing measures above statutory requirements which can apply to single streets or whole boroughs. Authorities can refuse permission where a standard property would end up sandwiched in between two HMOs.

Bath proposes to refuse HMO applications in areas where 10% or more of properties have already been converted.

Owner of Connect for Intermediaries Liz Syms said the council needed to be careful it was not damaging a vital source of lower-cost housing.

“Plans to restrict HMOs need to strike a careful balance as these properties are beneficial in addressing the shortage of housing problems that we have. Many landlords now run professional HMOs which are let to working professionals, whom despite having a good salary, do not have sufficient income to rent a whole property on their own.”

Gavin Dick, local authority policy officer at the National Landlords Association, said demand for HMOs was strong and if supply was restricted, rents for tenants looking for cheaper accommodation may rise.

He said: “Bath has high demand for shared housing from students but also from other types of tenants, including those on housing benefits and lower incomes, and while bringing in tougher restrictions on the proportion of shared housing might appease local residents it won’t dampen the demand for these kinds of properties.”

Dick said while plans such as these were unlikely to have any real impact on landlords looking to obtain finance, it would crystallise the market and contribute to higher rents, leaving the vulnerable in the hands of rogue landlords or homeless.

Syms said HMOs were gaining in popularity with landlords, as the potentially higher yields offered them a way of being able to meet the rising costs of buy-to-let property investments.

She said it was important that landlords checked with local authorities what restrictions prevailed before purchasing a property to turn into a HMO. Syms also warned additional licensing requirements could reduce landlords’ options when choosing a mortgage.

“If the local authority requires the landlord to hold a licence for a multi-let property which falls outside the definition of a HMO, not every lender will accept this type of security,” Syms added.

There are 1 Comment(s)

You may also be interested in

Bridging

Keep up-to-date with all the breaking bridging and short-term lending news and analysis, from regulatory changes to product innovation and inside market knowledge. Take a look at our broker and lender case studies showing short-term finance in practice.

Commercial

Find all the news, opinion and analysis for property finance brokers specialising in commercial and semi-commercial mortgages, alternative and development finance for commercial investments in residential projects.

Second charge

Stay up-to-date with the latest news, analysis and opinion on the secured loan market as it evolves into a mainstream finance option following European regulation on 21 March 2016.

Complex buy-to-let

Whether it’s a complicated asset or a complex customer, you’ll find out all the breaking buy-to-let news in this section. From limited companies to portfolio landlords, student lets to a House in Multiple Occupation, we’ve got all bases covered with our up-to-the-minute news, analysis and opinion.

Mortgage Solutions

Find all the breaking news, analysis and industry comment on Specialist Lending Solutions' sister site, Mortgage Solutions
Read previous post:
/IMG/591/288591/credit-crunch-coins-money-vice-watersmay2014.jpg
Lenders predict squeeze on 90% LTV mortgage products

Lenders expect a slight reduction in mortgage availability over the next three months, the Bank of England said today.

Close