If you’re planning to build or convert a House of Multiple Occupancy (HMO) that doesn’t fit the typical description, this article is for you. We explain what Sui Generis HMOs are and how to get the financial support you need.
What is Sui Generis planning?
The Latin term ‘sui generis’ means ‘of its own kind’. It is a term used to categorise buildings that fall outside the usual ‘use classes’ in planning applications. Large HMOs often come under Sui Generis planning.
In the UK there are around 20 different Planning Use Classes. Each one matches a definition of what a site can be used for – such as food/drinks, retail, hotels or industrial sites. These are set out in the Town and Country Planning Act.
Use Class C defines types of accommodation. Class C3 covers standard residential flats and houses, while Use Class C4 defines shared houses occupied by between three and six unrelated individuals – a typical HMO. It’s fairly common for developers to apply to convert a building from C3 to C4 use. But if your planned HMO will have more than six bedrooms, it won’t fit the C4 Use Class.
What comes under Sui Generis?
As well as large HMOs, buildings that typically come under Sui Generis are theatres, hostels, petrol filling stations, car showrooms, scrap yards, nightclubs, launderettes, dry cleaners, taxi businesses, amusement arcades, casinos and data centres..
What kinds of HMO need to be Sui Generis?
An HMO will fall outside of the C4 use class if it has seven or more bedrooms. A C4 HMO can usually be converted from a C3 dwelling under permitted development rights, unless the local planning authority has removed this permitted development right with an Article 4 directive. Meanwhile, any HMO of seven beds or more will require a full planning application.
What does this mean for mortgages?
To apply for a mortgage on a Sui Generis HMO, you must have planning permission in place.
The way lenders will assess the affordability and value of the property are different for a Sui Generis HMO. The property will be valued based on its yield, not its worth on the property market. That’s because its use has been changed through planning. This approach is sometimes called a Red Book or Long Form Valuation.
Depending on the total rent the HMO will generate, this approach often gives you a higher value than you would find with traditional bricks and mortar valuation.
Fewer lenders support Sui Generis HMO mortgages, which means that rates are often more expensive than with a regular HMO mortgage. You will need to be an experienced landlord to receive Sui Generis HMO funding.
How is a Sui Generis planning application different from others?
To convert a large HMO, the planning process can take time. Sui Generis is a complicated Use Class of properties, which means the planning requirements are different.
A Sui Generis HMO is seen as more commercial than residential so the requirements are stricter. You will have to meet certain structural requirements including acoustics, fire, transport and parking as well as building regulations. The reason is that there will be more people living in the house than standard, which affects the local area and community.
To get HMO planning permission we recommend appointing a planning consultant, who will have experience in all the specific areas of the application. It is a detailed process, requiring drawings and specific statements.
How can GPS Financial help?
Because these large HMOs require planning permission, the mortgage process can be more complex and time-consuming. Yet Sui Generis HMOs can be a very successful choice for property rental, so it’s worth investing the time.
We have a wealth of experience in supporting landlords through the process and finding the mortgage they need to achieve their goals. Talk to us early on about your plans and we can help connect you with the right professionals to achieve a successful outcome.
Remember too that you will need an HMO license for the completed property in order to let it to tenants. We’re here to support you through the various stages – just get in touch.