Your property is now a Mandatory Licensable House in Multiple Occupation, so we would like our money back say mortgage lenders.

News has reached me here at Carrfield that mortgage lenders are looking to penalise thousands of buy to let landlords by changing the terms of their loans due to the recent changes to HMO legislation.

The change removes the three-storey rule from the original HA 2004 requirement for Mandatory Licensing which came into place on 1st October 2018. This means that properties with five or more occupiers forming two or more households now fall under the Mandatory licencing rule.

These landlords will soon be receiving letters from their mortgage lenders outlining the changes and demanding that they either switch their properties back to single family buy to lets or re pay their loans. The mortgage companies are arguing that mortgages would not have been granted if the homes were licensable HMOs at the time of application and continuing to rent them as licensed shared houses breaches the conditions of their loans.

At this point I have to say perhaps the mortgage lenders need a better understanding of Licensing.  don’t they realise that even though these properties didn’t fall under the mandatory rule, before the changes, they did fall under Additional rule if the local authorities had this in place, meaning that these same landlords would still have had to get a license.

With all the incoming changes I am not surprised that some of these changes are going to catch both landlords and agents out if they are not kept up to date either by training or signing up to good legal blogs.