Council Seeks Powers to Introduce Business Rates
19th Nov 2018
With changes in legislation coming into effect in October, landlords may find it increasingly difficult to remortgage their properties.
Some of these changes in legislation include:
- The introduction of a minimum room size. Those used for sleeping by one adult must be a minimum of 6.51 square metres, whilst those shared by two must be at least 10.22 square metres. Local authorities will also be granted discretion to increase the minimum size if they wish;
- HMOs occupied by five or more people must have an appropriate mandatory licence, regardless of how many storeys the property has;
- Purpose-built flats with up to two flats in the block will require mandatory HMO licensing;
-Landlords must obtain a mandatory licence if the property is occupied by persons living in two or more separate households;
- Those in breach of the new regulation could face unlimited fines. It is also anticipated that failing to meet local authority licensing standards on an HMO property could lead to future financing issues
Commenting on the matter, chief executive at Commercial Trust Limited, Andrew Turner, suggests: "More landlords will be required to bring their HMO properties up to local authority licensing standards. In scenarios where perhaps one bedroom in the property fails to meet minimum licensing standards, there could be future implications, if the landlord wants to remortgage the property."
"Investors looking to remortgage may find that a lender will only base rental stress calculations on rental income from the bedrooms that do meet local licensing rules. That could make obtaining the required level of financing a lot tougher."
19th Nov 2018
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