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FSE Manchester: Experts see HMOs as growth area for buy-to-let

Buy-to-let experts at the buy-to-let panel at FSE Manchester recommended intermediaries to do more HMO deals.

Adrian Moloney, sales director at OneSavings Bank, said “We’re seeing more commercial properties because it’s outside of the tax rules and landlords look at more HMO student accommodations because of greater returns.”

He added that with new rules coming into force in October that’ll potentially create 170,000 HMOs in the country, it’s an area advisers need to engage with.

He said: “Are you engaging with your landlords? Do you know it’s coming? Part of the journey the PRA has to do is assess this.”

Moloney warned though that if a landlord develops and lets out a HMO, they are limited because a family probably wouldn’t move into it.

He added: “I think it’s an ongoing discussion that will go on the next few months.”

David Whittaker, managing director at Mortgages For Business and Keystone Buy to Let Mortgages, said that if the new rules say a property with seven rooms has six due to how the new measurements work, he will have to follow that and underwrite for six rooms.

That’s not the only new rules since from April landlords can only let out properties with an energy rating of E or above.

Whittaker found in the county of Lincolnshire 26.4% of properties in 2014 that were rented out to landlords lacked basic EPC requirements.

He added: “So anyone that sends me a portfolio for Lincolnshire, I’ll look at each property more closely and I think every lender will too.”

With many rule changes such as these and mortgage tax relief reductions, Whittaker argued that brokers should be paid more in proc fees.

He said: “They will stay up. From 1 September we did it with Keystone because we recognise the world has become more complicated.

“I welcome everything that puts something back on our side of the table for all the extra work you have to do before you even decide which lender to use.”

Source: Mortgage Introducer