HMO Valuations

[TrudyB]

I have a 8 bed HMO in the Berkshire area, I have recently split with my husband, he is under the impression that HMO can be valued commercially, I have spoken to residential estate agents and commercial valuers, and the response I have had is that the valuation would probably be exactly the same.

I am registered with the local council for HMO and have all the relevant certificates and all required installations have been carried out.

My ex husband wants me to re-mortgage in my own name, unless the house was sold for upwards of £600000 there would be no monies owing to him, it was my capital that funded the house. We purchased in 2006,prices did rise and the property was valued at £625000, but has now dropped to 525000 -550000.

We have a joint mortgage of £400000, so I would have to find a lender willing to lend to me solely. The purchase price was 480000.

I read a thread about someone looking to re-mortgage and this chap said that for upwards of 6 rooms a commercail mortgage is the only product available. I was under the impression that the Leeds Building Society might do my mortgage.

Does any one have any advice on the above. I would be very grateful.

Trudy

[BARONS1]

Valuations on HMO'S will change for the worst. Why, because once registered the councils are considering that you apply for planning permission to convert back to a single porperty. This, they will not fully admit but it is on the cards. Lets look at the background to this. Councils lack accommodation for single people, the old bedsits are being replaced under HMO'S and all the regulations that now apply ( this i fully agree with ). Due to the need for this type of property once set up do you really think they want to see it disappear and leave a even bigger gap in available property in this sector. As a result valuations will be done on a income yield basis, and capital growth for HMO's will be slower than other properties.

Estate agents have not yet fully realized the changes in valuations on these properties, but the experience investor has, and he is the one buying.

I have been renting for over 30years and do have hmo's, but only regard them has income investments not capital growth.

[BARONS1]

As such the propertry valuation and borrowing against it will become much more difficult. The lender will have more of a problem selling upon default. Most lenders will require larger deposits and loan to value has changed alot recently. You will have to pay a higher interst rate to refinance this property if you can find a lender. My advice is to find a good IFA who does mortgages and let him find the best deal for you. Property lending is very difficult in this area at the present time due to the credit crunch, and will not improve for many months.