HMO Licensing and Lenders

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    HMO Licensing and Lenders

    I am detailing an extract from a briefing note I have received from a lender operating in the HMO sector ,part of which might be considered beneficial for those whose properties until October 1st fell outside of the previous rules.

    "
    • On the licence application you must list the lenders and a local authority has an obligation to inform them about your application. If you have a mortgage which does not cover a licensed HMO you need to speak to your lender before the local authority contacts them.
    • It is also important to tell your insurance provider about this change to ensure that you are fully covered "

    #2
    Whats the likely reaction from lenders to such a disclosure? Will it vary significantly between them?

    Comment


      #3
      You raise an interesting question and one which cannot be answered in a straight forward manner.

      There are indeed a number of lenders for whom HMO's do not feature within their permitted criteria and there is indeed the possibility that once notified they could give notice that the loan is now in contravention of their permitted criteria and has to be repaid , this of course assumes that they have not elected to reconsider this as part of the Btl criteria. For others who do currently accept HMO's , they can simply amend their records and give notice that the loan will be switched to its HMO product range and any costs borne by the borrower.

      Given the state of flux that various lenders find themselves in I would advocate a preemptive move by speaking with the lender and gaining the moral high ground and asking how they intend to deal with borrowings which are at variance with their published criteria on Buy to Let. At the end of the day you have nothing to lose.

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        #4
        I can't help but think of what would happen to my old Auntie Linda in this scenario. She and my Uncle Fred had a family friend Bill who lived with them as a lodger for all his adult life. He became part of the family and we always referred to him as Uncle Bill. They also had two children in their two storey terraced house, which from Monday of this week would be a licensable HMO. They would have had no idea (if they were still alive) that this was the case. In fact they would never have even heard of an HMO, but they would neverthelss be liable to prosecution by the local authority, to have their mortgage called-in by the lender and to have any insurance claim refused if the house burned down.

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          #5
          That sounds like a single lodger, and therefore exempt.

          Comment


            #6
            Originally posted by leaseholder64 View Post
            That sounds like a single lodger, and therefore exempt.
            I had read this note from Tessa Shepperson where her second example is the one I quoted: https://www.landlordlawblog.co.uk/20...-new-hmo-laws/

            I therefore assumed that the lodger exemption hadn't survived the changes but having read a little more I think that it probably has and that Tessa, (and now I) may have got it wrong on this occasion.

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              #7
              DPT57 To err is human to forgive is divine

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