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Welcome to Advocate Finance, your trusted specialists in securing Property Conversion Loans for transforming residential houses into HMOs (Houses in Multiple Occupation).
Whether you are a seasoned investor or new to HMO conversions, we offer tailored financial solutions to support your project. Our expert team works with you through every stage of the process, ensuring you have the funding to maximise your property’s potential and rental income.
These conversion projects typically involve permitted development schemes or projects requiring planning permission, and the properties tend to be empty and/or unmodernised properties.
There is no limit to the type of properties that can be converted, but popular projects include:
When the conversion works have been completed and the property has the necessary building control certificates, Advocate Finance can provide advice and arrange mortgages should you choose to keep and rent the property instead of selling it. This is what most of our property investors undertake to raise capital funds for their next project.
It is beneficial to keep in contact with the adviser that arranged the conversion loan so that they can obtain the mortgage approval a few weeks ahead of the work being completed; it speeds up the process so the refinancing can take place quicker.
These are short-term loans (typically less than 2 years) that provide property investors and developers of all experience levels the funding to purchase (or refinance) a property that is to be converted and re-configured to another type of property. The loan typically comes in two types.
Type 1 – Provides funds to acquire the property but not the cost of the works to convert the property. Interest is retained or paid monthly. These loans can be more suited for smaller loans or where you don’t need the work funded because you have funds available. The lender fees tend to be lower as you do not require a monitoring surveyor.
Type 2 – These loans provide funds to acquire the property, 100% of the cost of conversion works (split into stage payments over the term of the loan) and the interest is added to the loan, so there are no monthly payments.
These loans provide a much higher level of borrowing, and better cash flow as both the work and interest are funded by the lender. These loans do have a higher minimum loan size, and you will also have to pay the fees for the monitoring surveyor to visit the property to verify the works.
Securing a property conversion loan for HMO projects can be more complex than standard mortgages due to the regulations surrounding HMOs. Lenders often require detailed plans, cost estimates, and an understanding of the local demand for shared housing. Planning permissions and adherence to HMO-specific building regulations are critical for approval. At Advocate Finance, we simplify the process, connecting you with lenders who understand the unique requirements of HMO conversions.
While a bridging loan can be used for certain HMO conversion projects, it may not always be the most suitable option. Bridging loans are ideal for short-term funding needs, such as purchasing a property quickly, but they lack the tailored features of a property conversion loan designed for extensive renovations and HMO-specific upgrades.
Property conversion loans are better suited for large-scale projects, offering staged drawdowns that align with project milestones and interest-only payments to manage costs during the conversion. At Advocate Finance, we can help assess your project’s scope and recommend the financing option that best meets your needs and goals.
Converting a property into an HMO involves strict licensing and compliance with local regulations, such as fire safety measures, room size standards, and amenities for shared living. Ensuring your project meets these requirements is crucial for lender approval and long-term success. Advocate Finance works with lenders who specialise in HMO projects and provides guidance on meeting licensing standards, giving you confidence throughout the process.
Advantages | Disadvantages |
Tailored for HMO Projects: Specifically designed to fund large-scale projects, including reconfigurations and upgrades to meet HMO licensing standards. | Higher Initial Investment: Conversions involve significant upfront costs, including structural changes and compliance measures like fire safety. |
Staged Drawdowns: Funds are released incrementally, helping to manage cash flow and reduce interest costs during the conversion. | Valuation: Commercial valuations are required, which can be more expensive than residential valuations. |
Increased Rental Income: HMOs typically generate higher rental yields than standard buy-to-let properties, offering greater income potential. | Longer Project Timelines: The conversion process and licensing approvals can take several months to complete. |
Enhanced Property Value: Converting to an HMO increases the property’s market value, offering improved refinancing or sale opportunities. | Market Dependency: Rental success and refinancing potential depend on local market demand for shared living arrangements. |
Wide Property Eligibility: Suitable for a range of properties, from large residential homes to mixed-use buildings. | |
Flexible Exit Strategies: Options to refinance with a long-term HMO mortgage or sell the converted property for profit. |
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Yes, most HMO conversion projects require a license from your local authority. This ensures the property meets safety and amenity standards for shared living. Advocate Finance can guide you through the licensing requirements and help secure funding for compliant projects.
The timeline depends on the project’s complexity but generally ranges from 6 to 12 months. Staged drawdown financing ensures you have access to funds at each stage to keep the project on track.
Properties eligible for HMO conversion include large residential homes, terraced houses, and semi-detached properties. These often involve reconfiguring internal layouts and meeting HMO-specific requirements, such as room sizes and shared facilities.
Staged drawdowns release funds incrementally as project milestones are reached. This reduces overall interest costs, as you only pay interest on the funds used at each stage of the conversion.
Our expert team of mortgage brokers are here to guide you through every stage of the process.
Important Information
ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
We are a credit broker not a lender.
Advocate Finance Ltd, registered at 55 Crown Street Brentwood, Essex CM14 4BD. Company Register number is 05579380. Authorised and Regulated by the Financial Conduct Authority. Our FCA registration number is 592830.
You can check via www.fca.org
We are registered with the ICO, Z1654205 and you can check via www.ico.org.uk.
We conduct both regulated and unregulated business and therefore not all products provided through us are regulated by the Financial Conduct Authority. We source mortgages and loans from a panel of lenders.
We may receive a commission that will vary depending on the lender, product, the amount borrowed or other permissible factors.
Advocate Finance is a mortgage and finance brokerage firm that specializes in securing loans and mortgages for various types of properties, including single properties, large portfolios, commercial sites, and development projects. They assist clients regardless of credit history, circumstances, or legal ownership, aiming to provide tailored financing solutions