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HMO Valuations | Everything you need to know

HMO valuations can be complicated. Whether it’s for the purpose of selling your HMO or refinancing, it’s crucial to know the difference between the types, what it means when stacking your deal and how to maximise the value.


The Methods


When it comes to having your HMO valued, there are two methods – Bricks and Mortar and Commercial. Which method you choose is entirely subjective and based on a lender’s criteria. Things such as the Planning Use Class, your mortgage lender, which surveyor has been chosen and location are all taken into consideration when deciding between a Bricks and Mortar Valuation and a Commercial Valuation.


Bricks and Mortar Valuations

These types of valuations are the most common type. If the property is a single C3 dwelling and is based on fair market value and local comparables then they are commonplace. Surveyors work to a standard criteria based on factors such as the size, number of bedrooms, location, condition and comparable properties in the area. Zoopla Markets have a great tool to give you an idea of what your property would be valued at.


Commercial Valuations


This type of valuation is less common. It’s used by lenders who offer commercial or yield-based valuations. These types of valuations are typically higher than a Bricks and Mortar Valuation. Again, properties are valued against a criteria of factors such as comparable properties, Planning Use Class, size, number of bedrooms or units, Article 4 Directive, HMO density in the area, management and of course location. The calculation model is based on rent, operating costs (usually between 15% and 35% but the is surveyors’ discretion) and the local yield (again, this is surveyors’ discretion). The Bottom Line Whether you’re looking to sell or remortgage your property, it’s key to ensure that it’s looking it’s best. Things like staging, refurbishing the property if it’s looking a little tired and making it feel like a great home for people always go down well. Valuation Packs Valuation packs can be a little marmite, but we think that they’re worthwhile. Here’s a list of what we’d suggest putting in your valuation pack.

  • HMO Licence Certificate

  • Floor plan

  • Before and after images

  • Planning certificate

  • Building regulations certificate

  • Tenancy Agreements

  • Fire Risk Assessments

  • Fire Alarm Certificates

  • Electrical Safety document

  • Warranties. Boilers, appliances etc.


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