Speaking about the rebounding activity in the market and the changing borrower profile, Louisa Ritchie, key account manager at Fleet Mortgages, said: “Going forward, the type of landlord is evolving and will evolve even more.”
She said there were more first-time landlords joining the sector and existing landlords were taking opportunities to build their portfolios.
James Forth agreed, adding: “We’re seeing more people get involved with houses in multiple occupation (HMOs), multi-unit blocks (MUBs).”
He said this used to be associated with students and low-quality housing, but with the challenges around homeownership, there was now more professionalisation in this part of the market.
A similar point was made by Ian Hall, regional account manager for the North at Landbay, during a separate presentation.
He said HMOs typically generated higher yields than single dwellings, making them attractive to investors.
Also referring to Ritchie’s point on first-time landlords returning to the market, Hall said: “Actually, lots of first-time landlords are joining the HMO market straightaway.”
Understanding HMO and MUB rules
Hall said there was a misunderstanding that HMOs had five beds or more with shared facilities, but he said a property became an HMO once it had three beds with shared facilities.
However, government licensing only applies to properties with five or more beds. Hall predicted that licensing rules could change if the demand for HMOs and MUBs carried on its trajectory, noting that local authorities had different rules.
Brokers should also consider that local authorities can bring in Article 4 directions at any time, which restricts planning for certain properties and areas and could limit HMO developments, Hall added.
Hall said brokers should make sure they were “aware of [their] landlords’ strategy”.
If you are interested in learning more about the BTL sector, the Buy to Let Event is still taking place next week in Cardiff on 1 May and Reading on 2 May; register here to attend.
