HMO licensing triggers mortgage no-go zones
AFS Team·29 May 2013·3 min read
Some big name property investment mortgage brands, like the Royal Bank of Scotland and NatWest, see additional and selective licensing areas for house in multiple occupation (HMOs) as no-go zones.
They cite the possibility that council licensing policies may push house prices down or make licensed homes difficult to sell as the reason for their decision.
Landlords looking to buy properties in these areas could face borrowing problems:
• Reading and Luton – Consultations are open on implementing additional licensing schemes for all HMOs
• Newham, East London – All private rented homes in the borough are subject to licensing
• Oxford – All HMOs in the city council area need a licence
• Haringey, North London – another consultation is underway to licence HMOs in certain areas
• Worcester – Councils are discussing whether to start an additional licensing consultation
Many other councils already additional HMO licensing schemes.
National Landlords Association chief executive Richard Lambert said: “The NLA is aware of the situation whereby some lenders choose not to lend in designated licensed areas, for example in Newham.
“Lenders may deem areas of designated licensing as high-risk ventures considering the current appetite for buy-to-let investment is strong throughout the UK.
“The NLA has consistently raised its concerns about the negative impact of licensing on investment, especially at a time when housing is much needed.
“Furthermore, if councils go ahead with the introduction of additional licensing relating to the provision of HMOs, landlords could find themselves breaching their mortgage terms by simply complying with the licensing requirements.”
