Switching Residential to Buy to Let or HMO mortgage

heston2014

Hi,

Looking for advice please -

Have an ex-council flat that I am renting out under Consent to Let as it is residential mortgage (moved in with partner).

My tenants are students and recently, was advised needed a HMO licence as tenants are not part of a single household.

Current Fixed Term ends in Jan, CTL can be extended but ideally, would like to switch to BTL or maybe HMO longer term.

The issue is, the property comes with a Right of First Refusal clause on the lease which expires in 2024. Consequently, due to ex council and this clause, apparently, my options for lenders are very limited.

Not switching to a new product/lender would mean variable rate, which may not be an issue if CTL extension is agreed/extended. Property is managed by an agent coming up to two years, spoke with a mortgage advisers and apparently, no options for lenders due to the clause. Have approached Council if the clause could be removed but they rejected.

Has anyone dealt with a similar case?
Should I be looking at switch or stick to variable rate until the clause expires?
or switch to BTL/HMO mortgage? If so, are there lenders that consider ex council properties?

Thank you for taking the time to read this post.

hannahcolobus

I guess (and quite rightly some would say) this is all in place to make things difficult for someone who buys council stock to then make a profit from. 

Wanderingpomm

HMO mortgages are very hard to get, have you for filled the HMO requirements? Fire doors, inbuilt smoke alarms etc? 

simon_or

I'm guessing this is a RTB property that you bought in 2014.

Depending on the particulars of the flat and block, plenty of banks will potentially lend on ex-council flatss, especially so if they are in greater London.

If you've spoken to a couple of good BTL mortgage advisers (and I'm not talking about the likes of L&C or Trussle) and they've all said it's a no go, then you're probably out of options.

dimbo61

We are now in June 2022 so only 18/24 months before clause runs out !
How many tenants have you got living in the property.
Three or more is a small HMO and Five or more is a large HMO.
Selective licence in your area ?
If you don't have the correct licence needed your Tenants can claim back all the rent they have paid.
I won't even go into the requirements of owning and running a HMO.
Forget L and C and they big bucket online brokers you need to find the right brokers to search for a BTL/HMO mortgage 

heston2014

simon_or said:

I'm guessing this is a RTB property that you bought in 2014.

Depending on the particulars of the flat and block, plenty of banks will potentially lend on ex-council flatss, especially so if they are in greater London.

If you've spoken to a couple of good BTL mortgage advisers (and I'm not talking about the likes of L&C or Trussle) and they've all said it's a no go, then you're probably out of options.

Thanks for the reply. Property is in London, haven’t yet found a good BTL mortgage adviser and looking online. Flat is on 3rd (top floor).

heston2014

dimbo61 said:

We are now in June 2022 so only 18/24 months before clause runs out !
How many tenants have you got living in the property.
Three or more is a small HMO and Five or more is a large HMO.
Selective licence in your area ?
If you don't have the correct licence needed your Tenants can claim back all the rent they have paid.
I won't even go into the requirements of owning and running a HMO.
Forget L and C and they big bucket online brokers you need to find the right brokers to search for a BTL/HMO mortgage 

Thanks for the reply. We have 3 tenants and we have applied for additional license/small HMO as advised by the council. 
Have reached out to Online Morgage Advisers to find a “matching” MA, will see if they can help. Our other option I guess is to continue with Consent to Let (providing we get approval for extending), ride variable rate until the clause expires then switch.

heston2014

Wanderingpomm said:

HMO mortgages are very hard to get, have you for filled the HMO requirements? Fire doors, inbuilt smoke alarms etc? 

Council also issued a draft license and had inspection done recently, awaiting report/remedial works. Prior to the inspection, we had fire risk assessment done and we need fire doors replaced. so hopefully, once we’ve addressed doors, we will get full license.

dimbo61

" we need fire doors replaced "
So you spent a couple of grand ££££ changing the fire doors in your flat.
I wonder if the council are replacing all the fire doors in the building ?
I have a family member replacing all the fire doors in a huge group of flats in Greater Manchester.
Doing 2/3 a day with over 700 needing replacement !
Mains wired interlinked smoke alarms in every bedroom and living area / kitchen.
CO alarm near gas boiler, gas hob, gas fire ???
Fire blanket.
Good luck and hopefully all bedrooms over 8.5m2 

heston2014

dimbo61 said:

" we need fire doors replaced "
So you spent a couple of grand ££££ changing the fire doors in your flat.
I wonder if the council are replacing all the fire doors in the building ?
I have a family member replacing all the fire doors in a huge group of flats in Greater Manchester.
Doing 2/3 a day with over 700 needing replacement !
Mains wired interlinked smoke alarms in every bedroom and living area / kitchen.
CO alarm near gas boiler, gas hob, gas fire ???
Fire blanket.
Good luck and hopefully all bedrooms over 8.5m2 

Not yet, council requested FRA, emergency lighting and alarms certificate upon submitting our application so we had those addressed (smoke alarms etc). We haven’t done the doors yet as we don’t know what else they’d ask for.

Good point, perhaps I should challenge the council if they are replacing all the doors in the entire estate.