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Case Study – Commercially Valued Small HMO for an Ex-Pat

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Periodically, we come across cases that we believe other property investors would be interested to learn about. The summary below is one such case, highlighting the client’s unique requirements and how we provided a solution they were happy with. We hope you find this recent case study helpful.

The Property

The property was a 6-bed HMO, consisting of 4 rooms having their own en-suite and a licence in place for every room to be let out on an AST.

Client Background

Our client is a very experienced landlord with a large portfolio including single lets and HMO properties. These properties are all in the UK, however, our client resides and works in Switzerland. The client is actively purchasing standard properties on the market, with cash where possible, to then convert into HMOs and refinance the property onto a long-term mortgage as a fully functioning HMO once the works are complete. The funds raised from the refinance often then fund the next HMO conversion project.

Client’s Requirements

Our client wanted to maximise the amount of funds that could be capital raised to help fund his next projects. Due to this HMO recently being fully refurbished to a high specification, with 4 rooms having their own en-suite, we had a strong case for the property to be valued on a commercial basis, even though it only has 6 bedrooms. The commercial aspect to the valuation gave the client the higher possibility of receiving an increased valuation which the client was willing to explore. This would mean a greater sum of monies could be raised, which as mentioned, was the main goal for the client. We also needed to consider a lender who could lend to an Ex-pat.


We placed this case with a lender who can not only offer a commercial valuation on a HMO of less than 7 beds, which is very rare in the market, but they are able to lend to Ex-pat applicants. Our client’s needs  were met, depending on the result of the valuation – This being the key component as to whether or not the lending could be maximized.

The valuation was paid for and instructed. On receipt of the report, the figures were as follows (The client was estimating a commercial valuation in the region of £350,000 – £380,000).

The market value of the property provided by the surveyor was £325,000 which for near enough every lender in the market, would be the figure used for lending purposes as it is only a small HMO (6 rooms or below).  The valuer then, as requested, provided commentary on the commercial valuation of the property and this came in at a figure of £360,000. Our client was extremely pleased with this figure. The majority of lenders would have been able to provide 75% loan to value on the £325,000 valuation which would equate to a loan size of £243,750 but in this instance, our lender could provide 75% loan to value on the £360,000 valuation which equates to a loan size of £270,000. This is an extra £26,250 of borrowing to go towards the client’s further property investment.

The finance provided was as follows –

Commercial valuation – £360,000

Loan amount of £273,050 (including a 1.25% arrangement fee) on a 5 year fixed rate

Client Feedback

As expats, we have always found it challenging to obtain credible mortgage providers for HMOs, especially lending against commercial valuations. Working with Advocate Finance (Henry Barley) was great given their strong relationship with various mortgage companies, one in particular that met all our needs. We obtained a strong commercial valuation, which enabled us to recycle most of our cash, and at very favorable rates. Even when we faced challenges around documentation, Henry worked very hard to liaise with the mortgage provider and ensure we made it to execution. Overall, very happy working with Henry Barley, who has now become our official mortgage broker for all future projects.

How can Advocate Finance help you?

Whether you have a portfolio that needs incorporating into a ltd company, a multi-unit block of flats that you require finance on, or a standard buy to let mortgage enquiry, we are experts in this sector and can find the right solution to suit your needs.

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Henry Barley

Henry Barley

Property Finance Adviser | | 01206 544333
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Henry Barley

Henry Barley

Property Finance Adviser | | 01206 544333