The Intermediary – June 2025 - Flipbook - Page 52
SPECIALIST FINANCE
Opinion
t Excellion Capital,
we recently
conducted a piece of
research that found
property investors
can benefit from
yields of up to 12.5% by purchasing
a three or four-bed property and
converting it into a six-bed house in
multiple occupation (HMO).
Upon publication of those findings,
we received a number of enquiries
from property investors interested
in venturing into the HMO sector,
intrigued by the strong potential
returns at a time when planning
authorities are being encouraged to
push residential applications through
in support of the Labour Government’s
determination to increase the delivery
of homes available in the UK.
Following these conversations, I
thought it would be useful to explain
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The Intermediary | June 2025
more closely what sort of financing
options investors should be looking at
to fund an HMO conversion, and how
a debt adviser or broker can ensure
investors are accessing the best rates
possible at any given time.
Taking the bridge
The nature of HMO conversions
means that they are perfectly suited
to bridging loans, which investors can
use to fund both the acquisition of a
property and its conversion.
Investors should see this as a real
benefit of conversions as lenders tend
to show strong favour towards bridge
loans – not only do they complete
much faster than development loans,
but they also require far less oversight.
My experience tells me that lenders
are willing to provide an HMO bridge
loan with very high leverage, oen
75% against the purchase price, plus
ROBERT SADLER
is vice president of real estate
at Excellion Capital
100% of costs. However, the problem
for investors is that new bridging
lenders are constantly coming to
the market, while existing lenders
continuously update their offerings
