During a panel session at the Mortgage Introducer BTL Forum, in association with the Mortgage Times Group, an intermediary stated that the HMO market remained strong, but only a handful of lenders would currently lend on HMO property and even those had restricted their lending criteria to 65 per cent loan-to-value (LTV).
The broker said she would like to see more lenders transparently lending in that market and could not see why so few currently do.
Bob Stanworth, senior product manager at Bristol and West Mortgages, responded that although Bristol & West does not lend on HMOs, he believed that with a shrinking number of suppliers, the market offered opportunities going forward.
However, he added: “One of the difficulties will be in the repossessions area. As a lender we would become the landlord and are liable then for HMO activities. Having to register with the local authority and undertake all the administration would be a difficult if repossessions did occur.”
Gus Park, head of BTL and lifetime mortgages at Bradford and Bingley Group, explained that there were huge differences in types of HMOs, citing respectable five-bedroom town houses and bed-sits with a ring cooker as examples.
He said: “We are happy to lend on HMOs. There are risks with licences and there are risks with repossessions, but I wouldn’t like to overstate that, because there is still a market for this. We may have a short-term worry in whether the implications of the new licensing laws means a reduced number of landlords operating in this sector, however this should stabilise and there will still be a demand for these properties. This is a good market to operate in.”
