Leeds BS  

Leeds launches HMO range

Leeds launches HMO range

Leeds Building Society is introducing five-year fixed rates to its houses in multiple occupation (HMO) mortgage range.

The products, available from 8 February, come with free standard valuation and £500 cashback.

Leeds BS offers products tailored to small and large HMOs based on planning and licensing requirements.

The five-year HMO deals for small properties include a 2.49 per cent fixed rate up to 60 per cent LTV and 2.69 per cent fixed rate up to 70 per cent LTV. Both have a product fee of £999.

For large properties a 3.54 per cent fixed rate up to 60 per cent LTV and 3.84 per cent fix up to 70 per cent LTV are also available, both with a £1,999 fee.

Other features include a yearly 10 per cent penalty free capital over-repayments facility and tapered early repayment charges of 5 per cent for the first two years, dropping to 4 per cent, 3 per cent and 2 per cent in the last three years respectively until May 31, 2024·

The products are available for properties with up to eight bedrooms. A small HMO can have up to and including six occupants and a large HMO more than six occupants.

Leeds defines HMOs as entire properties, houses or flats that are let to three or more tenants who form two or more households, and who share a kitchen, bathroom or toilet.    

Matt Bartle, director of products at Leeds Building Society, said: "Following broker feedback we’ve developed these new five-year options for small and large HMOs, which we believe will meet the needs of landlords looking to diversify their portfolios and move into this sector.

"Insight from brokers revealed professional landlords often prefer to use their own legal advisers during the buying or remortgaging process.

"We’ve listened to brokers and introduced £500 cashback across our new five-year HMO range, which could be put towards conveyancing costs should the landlord choose."

Leeds BS stated a growing number of landlords were reviewing their property portfolios due to new HMO regulations and tax changes.

For instance, an HMO with five or more occupants, forming two or more separate households, needs a licence from the local council confirming the number of permitted occupants, number of rooms suitable for sleeping accommodation and minimum room sizes.

Nicholas Morrey, product technical manager at John Charcol, said he was seeing a slow and steady increase in HMOs, especially in university towns and London.

He said: "For landlords, the rental yields on normal properties are quite low and they can’t get anywhere near 75 per cent LTV, so are finding more benefits in turning properties into HMOs.

"To put it into some form of context, in 2017 we didn’t do any business with the lender Foundation Home Loans, which specialises in HMOs and buy-to-let.

"In 2018, we did just under £10m of business with them, so this market is growing."