The first thing on your HMO Mortgage checklist should be; does your property have planning permission to be an HMO?
A normal residential house has a planning classification of class C3. To get an HMO mortgage the property must have a class C4. Class C4 is for small Houses of Occupation ( HMO ) this covers properties with 3-6 tenants. This was easily carried out under permitted development planning and still can be if your property is not in an article 4 direction area designated by the local authority.
To check that your property isn’t in an article 4 direction area find your local planning authority by clicking here.
Then once you have found your local planning authority website put ‘Article 4’ in search bar. This is my local council for example. All areas covered under the article 4 direction in the borough will be listed and usually with a helpful map to identify the exact roads
If your property is not in an article 4 direction then to get a change from C3 to C4 can be carried out under current permitted development rules but document everything as to when it becomes C4 in case an article 4 direction comes into force at a later date. For added peace of mind its worth applying for a (Lawful Development Certificate)
If it does fall under article 4 direction and you haven’t got planning permission for C4 you still have some options (This is assuming purchase, if you are remortgaging as a running HMO this should already been in place).
Article 4 Direction is supposed to limit the number of HMO’s in an area to roughly 10%. So how many HMO’s are in the area you are interested in purchasing? Well as they have had to get planning permission you can find out.
Same website as you had to find out the article 4 direction put in the search ‘Planning Applications’
You can then search the road and surrounding roads as to how many HMO’s have had accepted (and on some sites refused) If you then count up the number of households in roughly ¼ mile radius ( a flat I was advised when I went through this process counts as 1 household so if a house has been converted into 3 flats say this is going in your favor).
If there are say 10 HMO’s in 100 households it is going to be very tight.
Planning also looks at parking etc so if the parking is terrible now then adding potentially 6 cars makes it worse. No parking, double yellow lines outside, for example, helps as less impact to the street.
You’ve looked at planning you now have 3 options. Walk away, go for full planning and make sale subject to this being accepted. Purchase the property with a bridging loan carry out the necessary planning and works and then remortgage as an HMO. ( if you plan to purchase using a bridge to speed up the buying process it is worth considering a pre-planning application to at least get the view of the local planning department) Risks involved in not getting the property are taking to long for the seller or not getting planning and being stuck with a house that can only be rented to one family.