Selling flats individually that are in an HMO

kevone007

I currently have 5 self contained flats on a freehold mortgage with Capital Home Loans, I would like to sell flats individually over nx 5 years, as they are worth far more selling them that way. CHL have refused saying I must sell the block of 5 together which is not beneficial. Is there a lender out there that I could re mortgage with to allow me to sell the 5 flats on a leasehold basis?

G_M

See an independent mortgage broker and/or post on the mortgage forum.

Or pay off the mortgage (get a loan?), create the 5 leases, sell the flats (and pay off the loan).

BitterAndTwisted

Five self-contained flats cannot be an HMO. Perhaps this is where your lender may have got the wrong end of the stick?

If you divide the property into separate leaseholds and sell one, the lender no longer has a mortgage on the whole property, or won't let you have this one, and this is the difficulty you may have.

red40

BitterAndTwisted wrote: »

Five self-contained flats cannot be an HMO.

Why not? If the building satisfies the requirements of section 257 of the Housing Act 2004 it can be a HMO.

martindow

Doesn't an HMO imply that there are some shared areas in the house? This seems to be incompatible with the flats being self contained.

kevone007

martindow wrote: »

Doesn't an HMO imply that there are some shared areas in the house? This seems to be incompatible with the flats being self contained.

they have a shared communial hallway, so are registered as an HMO, each flat is worth 70k approx if sold individually, but sold as a block of 5, value only 250k

theartfullodger

kevone007 wrote: »

I currently have 5 self contained flats on a freehold mortgage with Capital Home Loans, I would like to sell flats individually .....

You need to do three things first...

a) Ensure that each flat has a separate Land Registry leasehold deed...
b) Establish separate freehold (presumably initially owned by you then in equal shares depending on ownership..?)
c) Change the single mortgage into something else so you can sell.. (perhaps initially 5 separate mortgages - or maybe 2, 3 or 4 if there's enough equity..)

Not quite sure which order this needs to happen in. Sounds like you need to re-mortgage 1st to someone more flexible who understands your plans (or simply pay off the mortgage..)... and a good conveyancer to understand how the sale(s) will happen,

Cheers!

red40

martindow wrote: »

Doesn't an HMO imply that there are some shared areas in the house? This seems to be incompatible with the flats being self contained.

There doesn't have to be any sharing of even a communal means of escape for a property to be a HMO. Generally people automatically think a HMO is a bedsit, shared house, when in fact a building can be a HMO if it consists entirely of self contained flats that didn't and still doesnt meet the requirements of the 1991 Building Regulations and more than 2/3rds of the flats are owner occupied. If neither of the above are satisfied it falls into what is classed as a section 257 HMO pursuant to the Housing Act 2004.

http://www.nationalhmonetwork.com/definition-flats.php

HTH