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p>After a series of seminars with its valuation panel, Shawbrook Bank has produced four clearly defined valuation buckets for HMOs to provide guidance to brokers.
Attended by over 100 valuers, the sessions were designed not only to discuss Shawbrook’s thoughts but also to challenge the valuers and gather feedback to ensure it gained an appreciation of the different opinions nationally.
As a result of these sessions Shawbrook came up with four valuation buckets for HMO property:
HMO1: Small HMO, no Article 4 or planning exists, fabric of building remains largely unchanged – therefore purchasers are unlikely to pay a premium for the property - lending is against value as a private dwelling (PD)
HMO2: No Article 4 or planning exists but there is a demand for this property as an HMO, the fabric of the building has changed - lending is against Market Value
HMO3: Article 4 is in place - lending is against Market Value
HMO4: Sui Generis planning is in place - lending is against Market Value
“The work we have done in this area has taken some time and we have only just reached a stage where it is available for brokers,” said Karen Bennett, Sales and Marketing Director of Commercial Mortgages at Shawbrook Bank.
“The new HMO valuation buckets feature as part of a dedicated push to the broker market in the form of a clear framework, and has been built into the existing Shawbrook product guide.”
Shawbrook’s specialist team drove this agenda alongside our Panel Manager Appraisers UK, but we were really pleased with the active involvement from our valuers. We have ensured that these changes have been communicated to all our valuers and including within our lending guidelines.
Karen added that at the moment no lender has been particularly active in clarifying how they approach HMO valuation which could create problems from the outset.
“HMOs are a tricky asset class as there are several factors influencing how they are valued and these can be fairly cloudy at best. Issues such as planning, licencing, degree of structural change to the security - all impact the valuation viewpoint,” said Karen.
“I am surprised at the historic lack of information available around HMO valuations, as the inherent complexity of the area demands clarity so that the customers’ expectations are managed with a view to achieving the desired outcome.
“I am proud of the work we have done in this area and hope that the broker community benefits as a result.”
After a series of seminars with its valuation panel, Shawbrook Bank has produced four clearly defined valuation buckets for HMOs to provide guidance to brokers….
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