£198,000 Secured for a 6 Bed Social Housing HMO in Manchester

Our client, an experienced property investor, purchased a three bedroom house in Manchester with a clear strategy in mind. Rather than letting it as a standard residential property, they converted it into a six bed HMO and leased it to a social housing provider, creating a stable long term income stream. With the conversion complete and a housing association tenancy in place, the next step was to refinance out of the investor funding and onto a mortgage.

The Problem

Social housing leases are not something every lender is comfortable with. The lender pool for this type of deal is much smaller than for a standard HMO or buy to let and converted properties come with another layer of complexity. Valuations on converted HMOs can be a challenge, as the increase in value created by the conversion can sometimes be difficult to substantiate. If the valuation comes in lower than expected, it can affect the amount a lender is willing to provide.

The Solution

We identified a specialist lender with experience in social housing projects and an appetite for this type of deal. Beyond finding the right lender, the structuring needed to work for both the client's immediate position and their longer term plans. The deal was placed and completed within six to eight weeks.

The Outcome

The valuation came back positively, reflecting the value of the converted property and the security of the social housing lease. With the mortgage in place, the client was able to repay the investor who had funded the project and had money left over to put towards their next deal.

The Results

  • Purchase price: £265,000
  • Loan amount: £198,000
  • Rate: 5.29% per annum
  • Term: 5 years
  • Product: SPV mortgage
  • Completed in 6 to 8 weeks
  • Social housing is becoming an increasingly popular strategy among property investors looking for stable, long term returns. With a six bed HMO in Manchester now in place and a social housing lease secured, the client is well positioned to build on this and move onto the next project.
    • If you are working on a social housing or HMO project, get in touch.

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