Purchasing an existing HMO advice

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    Purchasing an existing HMO advice

    I have been offered a property with
    7 occupants. It needs to be a cash purchase. I do not have HMO experience. I am happy for them to stay on although there seem to be rental arrears from some occupants. Also, a large Council Tax arrears case. No paperwork is evident at this point of time. Eg hmo licence or occupant agreements. I need advice please. There may be a point where I would like to empty property and occupy it/ extend it etc. Advice would be much appreciated.


    #2
    If the HMO is unlicensed I would advocate seeking full vacant possession and make the purchase conditional upon thepresent owner making full and final settlement of all outstanding Council Tax debts. If achieved then an application needs to be submitted to gain an HMO license provided of course that the property fully complies with all the requirements demanded to allow for the license to be granted, if the property isn’t fit for purpose then costings need to be obtained to determine if it is worth all of your effort.

    Do you have existing Buy to Let properties alreadyeven if they aren’t HMO’s, I ask since funding might be available should you end up needing to raise a mortgage but if this is your first acquisition within the residential investment market then this changes the complection of such a transaction particularly if you are not a homeowner.

    I believe you need to tread very carefully in your quest to buy this property, having questionable tenants without the correct AST’s in place , rental arrears and Council tax debts would make even an experienced investor think twice.

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      #3
      At 7 occupants the property may be a sui-generis HMO requiring planning permission. Without this its illegal and liable to a fine of up to £30,000 from the local authority and possibly 12 month rent repayment order for each of the tenants. Add that to the cost of paying the tenants to leave, since you probably wouldnt be able to issue them with valid notices, plus possible deposit penalty issues and the seller should probably be paying you to take it! If you are seriously interested I would get a proper valuation done and then offer £100,000-£150,000 less.

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        #4
        It sounds like a potentially expensive nightmare. Walk away - or pay a solicitor with specialist knowledge of housing/conveyancing law to advise you before you do anything,.
        'Pause you who read this, and think for a moment of the long chain of iron or gold, of thorns or flowers, that would never have bound you, but for the formation fo the first link on one memorable day'. Charles Dickens, Great Expectations

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          #5
          After being provided with further information, I have sprinted away!! Thank you for your sound advice, based upon my incomplete knowledge upon my previous posting and your wisdom (and possibly 6th sense!) Thank you.

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            #6
            Sometimes it's just best to leave it and not get involved.

            In respect of the council tax, once ownership changed the council tax arrears would not have been your problem. They belong to the landlord from the time they were incurred.
            Previously served 10 years as a council tax advisor with a local authority but now self-employed with my own council tax consultancy.

            If your local authority disagrees with any aspects of your council tax claim, as they are free to do so, a Valuation Tribunal appeal may be required.

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