How CHL Mortgages for Intermediaries can help get your application back on track
If you’ve travelled into Birmingham’s New Street train station from London recently, you can’t have failed to notice all the work that’s taking place as part of the HS2 project.
As someone who travels the line on a regular basis, it’s been fascinating to watch the progress over the months, and I’m always amazed by the number of people working on the site.
On my last trip, I started wondering where these people live. I know some will be from the local area, but I’m sure many will be from outside the West Midlands, which begs the question – where do they all stay?
It made me think about a scenario whereby the owner of a nearby local business, let’s call it Rosie’s Coffee Shop, is approached by some of the workers asking if she knows of any accommodation in the local area. As they only need somewhere to live during the week, they don’t want to be tied down to long-term contracts and are looking for somewhere with a fixed price that includes utilities.
The workers’ question gets Rosie thinking that there could be an opportunity by providing them with somewhere to live during the week, as well as offering some basic housekeeping services, for example cleaning the property and providing fresh bedclothes.
As someone who’s owned a single dwelling rental property in her personal name for a number of years, Rosie believes that investing in a house in multiple occupation (HMO) could be an efficient way of using the healthy retained profit she’s built up in her business, as well as helping her to grow her buy-to-let portfolio.
She’s seen a property for sale in the local area which she thinks could be ideal to rent out to four people, but as she doesn’t have any experience with HMOs, she seeks the advice of a broker.
The broker tells her that before she does anything else, she should contact her local authority to check if there’s what’s called an Article 4 direction in place in the area Rosie’s planning to purchase. They explain that Article 4 directions remove permitted development rights meaning that certain changes to a property, including converting a house into an HMO, require planning permission.
They also advise her to check whether the property needs licensing. Although an HMO licence is generally not needed for properties with three or four people, some councils do have additional licensing schemes in place. They warn her that landlords found in breach of licensing requirements could face a substantial financial penalty.
When Rosie contacts the planning department, she’s told that although an Article 4 direction is indeed in place, the house has had a planning application for change of use from a C3 to C4 property granted in the past which means it can be converted into an HMO without the need for planning permission. She also learns that local authority is a council that does have an additional licensing scheme in place, and she’ll need to licence it correctly before renting it out.
How CHL Mortgages for Intermediaries could help
When Rosie gets back in touch with the broker to gain advice on a suitable mortgage, they tell her that very few lenders will lend to a trading business and even fewer are prepared to consider serviced accommodation, but they do know that CHL Mortgages for Intermediaries will consider her case.
Our CHL 2 range of products has been designed to offer broader criteria options for landlords with more complex borrowing needs, such as trading companies or those wanting to use retained profits to invest in a buy-to-let property.
CHL 2 is available to individual and limited company landlords and includes 2 and 5 year fixed rate products with up to 75% loan to value, as well as a range of fee options.
We can provide finance for a wide range of property types including houses, flats, serviced accommodation, new builds, HMOs and multi-unit freehold blocks, and short term lets.
To find out more about how we could help, search our criteria, browse our products or take a look at our Product and Criteria guides.
Or, if you’d prefer, get in touch with a member of our sales team who’ll be more than happy to help.
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