HMO Development Finance

If you’re looking to develop a house for multiple occupants (an HMO), Charterbank provide fast reliable finance across the entire South West and Southern half of the UK.

HMO properties can make desirable investments, as they are known to yield relatively high returns especially with renting in high demand in certain locations. However, due to the complex nature of HMOs – such as the need to comply with given standards, specifications and current legislation, these projects can be more difficult to keep on track and on budget, especially because building works generally need to be completed in one phase.

For many HMO developers, particularly first timers, it can be incredibly difficult to find a Lender. As a Principal Lender specialising in fast non-status property finance, we are able to offer bespoke finance for all types and sizes of HMO, including loan facilities for first time developers.

As a specialist non-status lender, Charterbank only provide loan facilities for business purposes (such as ‘build to sell’ or ‘build to let’) and cannot lend where the purpose is to occupy the property once finished. Loan facilities are available to individuals, sole traders and limited companies including SPV’s, with no personal guarantees typically required.

• Products from 3-12 months • Immediate decisions • Up to 65% (net) LTV • Ltd Companies accepted • Self cert non status loans • No monthly interest payments • No upfront fees • No exit fees • No penalties • No red tape

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    Loan Type:
    AuctionBridgingDevelopmentRefurbishmentBusinessFarmingAgricultural Land

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    How does development finance for
    an HMO work?

    This type of finance usually works by securing the loan facility against the building being developed. However, alternative land or property can be offered as security if required.

    You can apply in your personal name or that of a company (which can be a new or existing company). Typically, 50–60% (net) of the site/property value can be advanced at the start of the loan with additional stage payments available throughout the build.

    Products are available to fund up to 100% of the development costs.

    Stage payments are pre-determined at offer stage for ease of budgeting. However, these can be varied if the build programme or budget alters. Payments are typically made within 1 working day of the in-house site inspection having been carried out and made without the need for a Quantity Surveyor or Monitoring Surveyor.

    Charterbank is dedicated to providing an exceptionally high level of service and is renowned for its speed, integrity and reliability amongst customers and introducers alike. The management team enjoy a wealth of property, development and commercial finance experience. Contact us for an initial discussion.

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    Examples of HMO developments

    With housing in short supply, HMO properties are in increasingly high demand. We work with active landlords and buy-to-let investors within strong rental areas to assist with portfolio building.

    Landlords/investors view HMOs as a way to spread their income risk across multiple tenants, help provide affordable safe accommodation and yield sensible risk-relative returns.

    Here, explore some examples of HMO property developments we’ve recently supported or considered:

    › Large house to HMO conversion in Luton with 6 self-contained rooms.

    › Former pub to HMO in Birmingham comprising 12 self-contained rooms.

    › Terrace house with large rear extension in Taunton to form 4 small self-contained flats.

    › 50-bed new build student scheme in Canterbury. Speculative site purchase for proposed development.

    Is HMO development finance for you?

    Applications are welcomed from developers and private individuals of all levels of experience. First time developers are accepted provided a suitable professional team has been appointed. Charterbank only provide loan facilities for business purposes (such as build to sell or build to let) and cannot lend where the purpose is to occupy the property once finished. You can contact us for an informal discussion about your finance requirements.

    Find out more information on common loan scenarios
    You can contact us for an informal discussion about your finance requirements.
    Or click here to apply for an HMO development loan.

    Additional HMO FAQs

    What is an HMO?
    An HMO property (a house for multiple occupation) generally means three or more people living together, who are from two or more different households. They can share facilities such as bathrooms, living rooms and kitchens.
    Do you consider HMO development projects?
    Yes, we do. This type of project fits with our vast experience in, and commitment to, property development and refurbishment finance.

    Charterbank can provide funding to purchase a residential, commercial or mixed use property for conversion into an HMO and/or provide funds to carry out the works required for the conversion with direct access to underwriters and decision makers all the way.

    Do you fund first time HMO developers?
    Yes. While many Lenders will only provide HMO finance to those with a proven track record, we are different. Contact Us (link?) today about non-status property development finance.
    How can HMO finance be used?
    Charterbank’s tailored development and refurbishment finance is available for HMO projects of all sizes. We provide loan facilities for business purposes such as build to sell or build to let/portfolio building. Our loan products are fast, dependable and bespoke to suit the needs of the project.
    What is the typical loan size for HMO developments?
    Charterbank provide non-status development loans ranging from £30,000 – £500,000 with larger requirements considered on a case by case basis.
    Over what term can I borrow?
    Flexible loan terms from 3–12 months are available and come complete with rolled up interest, no up-front fees, no exit fees or early repayment penalties. Under most circumstances loan terms can be extended if additional time is required.
    Can I arrange finance for a part-finished project?
    Charterbank specialise in finance for part built, unfinished and stalled projects and developments. We will even consider providing funding for part-built HMO projects with missing or uncertified building works. Lending decisions are made on a case by case basis.