Specialist buy-to-let mortgage broker firm Commercial Trust has predicted there could be a spike in financing enquiries over the coming weeks, as landlords rush to meet the October 1 deadline for licensing laws on Houses of Multiple Occupancy (HMOs).
The rules, announced in March 2018, mean, according to the Residential Landlord’s Association (RLA), an additional 177,000 buy-to-let properties could require a mandatory HMO license.
Penalties for running an unlicensed HMO or for failing to meet the required licensing standards, set by the relevant local authority, could see landlords face unlimited fines.
Andrew Turner, chief executive at Commercial Trust, said: “More landlords will be required to bring their HMO properties up to local authority licensing standards.
“In scenarios where perhaps one bedroom in the property fails to meet minimum licensing standards, there could be future implications, if the landlord wants to remortgage the property.
“Investors looking to remortgage may find that a lender will only base rental stress calculations on rental income from the bedrooms that do meet local licensing rules. That could make obtaining the required level of financing a lot tougher.
“At present, we are not clear from the lenders on what their future approach might be, however, there are ways we can help landlords should they face this issue.”
