Banks Pull the Plug on Lending for Student Housing

This makes me cross Oxford are using both Article 4 direction and Selective licensing to restrict HMO's in the private sector while allowing this type of development to impact on peoples homes.

RE STUDENT HOUSING i WAS RECENTLY CONTACTED BY MY MORTGAGE PROVIDER TO INFORM ME THAT I HAD BROKEN THE CONDITIONS OF MY MORTGAGE AS MY HOUSE WAS NOW A LICENCED HMO I AM IN CARDIFF WHERE CONDITIONS AND LICENSING ARE QUITE STRICT. lUCKILY I WAS ABLE TO INFORM MY MRTGAGE PROVIDER THAT THE STUDENTS WERE ON 1 CONTRACT AND NOT INDIVIDUAL CONTRACTS.SEEMS LIKE THEY WANT TO PULL THE PLUG ON STUDENT HOUSING AND LOOKING FOR EXCUSES

Very interesting! Which lender was that?

BANK OF IRELAND

I suspect that story could make National press if you are interested in a name and shame type expose'. We would need evidence of facts but there is no pressure. It's up to you

It is interesting that whenI bought this particular property in 2004. It was a 4 share. However, interest rates shot to 7% which meant I was runnng at a loss of £150 per month.But I extended with a small permitted developement to ensure that the kitchen was large enough to support a 6 share. I then divided the large sitting room to incorporate 2 more bedrooms. Original mortgage provider was Paragon .However, by doing this I encreased my yield significantly.However, Cardiff City Council has now included selected licensing which means that any propeties within a certain area and are let to 3 or more who are not related are now classed as a HMO This ensures that they get more licensing fees and also that the area because of increased revenue has extra facilities ie rubbish removal etc. I cannot fault Cardif licensing they are helpful to both the landlord and tenant However, they automatically inform the mortgage provider that these properties are now HMOS. When I spoke to Mortgage provider to inform them of one contract they were happy with that they only seem to be concerned with 7 or more occupants and the problems getting them out in case of rent arrears. This rarely happens with students. They have a contract until June and are are given notice to quit almost immediately to combat this problem .

All's well that ends well then. Thanks for sharing.

a house share let on ASTs is in fact let on license due to the clause "exclusive use" is not possible. therefore as with a license, only 7 days notice is needed to evict.

Please read this Blog by Tessa Shepperson.http://www.landlordlawblog.co.uk/2011/10/12/five-points-on-residential-licenses/
As you will see, from my comment, many landlords make the mistake of thinking that using a contract called a Licence Agreement (not an HMO lIcence) saves them having to use the legal possession process. The fact is that a "house share" on one contract is an AST ragardless of what you call it because the occupiers are, in law, joint Tenants not individual Licencees because collectively they have "exclusive use". Regardless of what you call the agreement the law will call it an AST and if you do not go through legal process when removing these tenants you will have committed Illegal Eviction. A landlord can name the contract anything he wishes, because there is no legal requirement to have a written contract, it is the way in which the landlord manages the tenancy that is regulated by law.

A lender my change the criteria for lending because of their percetion of risk. The National Landlords Association (NLA) are working with LloydsTSB at the moment because Lloyds want to lend to responsible landlords. Lloyds are learning, from attending NLA members meetings, that being a reponsible landlord is about knowing the law and regulation that surrounds our business and that knowledgable landlords are a safer bet regardless of the tenant group or type of tenancy. Hopefully all lenders will begin to look into the knowledge and management skills of the landlord when making their decisions rather than relying on ill informed perception of their risk. Landlords need to build up a professional "profile" in order to evidence that they are a good risk. This includes becoming a member of a respected landlords assocation like NLA and a member of an Accreditation Scheme that is based on education rather than property standards. If there is not a scheme like this in your area the NLA have a national scheme that is open to landlords in any area. See http://www.landlords.org.uk

Selective Licensing will no doubt reduce the supply of affordable homes, not only for students but for low paid workers and single people on LHA. In my opinion Selective Licensing and Article 4 Directives are counter to the needs of all local authorities to encourage investment from landlords to increase the supply and I am certain that it will not be long before these authorties realise that they have shot themselves in the foot. It is time that organisations like Shelter turned their attention to these authorities and asked them to justify their decisions which will increase overheads, and therefore rents, and reduce the supply and choice for those tenants who they are supposed to be protecting.

The road ahead is full of pot holes for landlords and we need to consider where we will invest in future, choosing those authorities who are landlord friendly and supportive of the PRS while leaving those who are not to stew in their own juice. Tesco would not open a store where the authority did not allow them to have a car park why would a landlord buy property where the local authority would increase our overheads and prevent us from letting to our chosen customers?