The Queen Elizabeth Hospital dominates the skyline on the outskirts of Birmingham, a gleaming 14-storey monument to healthcare which has treated more than 15 million patients since it was opened back in 2010.
With around 1,200 patient beds and featuring one of the world’s largest critical care units, the hospital has over 8,000 staff working around the clock caring for the people of the city and the wider West Midlands region.
That’s a lot of doctors, nurses and other medical workers, many of whom will need short-term, flexible accommodation close to where they work. And where there are lots of transient professionals looking for somewhere to rest at the end of a busy shift, it means there are lots of opportunities for landlords prepared to think outside the box.
Introducing hybrid HMOs
The world of specialist buy‑to‑let is evolving fast, and nowhere is that more evident than when it comes to hybrid HMOs. For landlords willing to think creatively about layout, configuration and tenant demand, the opportunities to increase yields have never been stronger.
For example…
Imagine an eight bed HMO property close to the Queen Elizabeth Hospital that might traditionally have been let out to students in the past. While a student tenant would only have paid a standard rate for a basic room with shared bathroom and kitchen facilities, if you were to reconfigure those rooms to include ensuite facilities, high-quality furnishings and maybe smart TVs to create a more premium experience, then suddenly the property would appeal to a wider, higher-paying audience. You could maybe go even further and convert two of the units into short-term lets. Add in serviced accommodation-style cleaning and linen changes, and the difference in rental yield could be significant.
This type of property wouldn’t just generate strong rental income; it would also benefit from increased open-market value due to its configuration, location and income profile.
How CHL Mortgages could help
The ability to operate a property in a multi‑faceted way – part short-term lets, part self‑contained units, part HMO – gives landlords more control over income, occupancy and tenant mix. This is where lender flexibility becomes essential.
Many landlords acquire properties in need of modernisation, sometimes using cash, family loans or bridging finance, and then undertake a full schedule of works to transform them into high‑yielding hybrid HMOs. The problem they can face, however, is some lenders won’t accept these operating models, others will only value the property at its original purchase price, regardless of the improvements made, while others won’t allow day one remortgages.
Fortunately, here at CHL Mortgages we understand the nuances of these models. Our common‑sense approach means we look at the real value of the asset, the real income it can generate, and the real demand in the local market.
We’re indifferent to whether a room is let on a short-term or fixed-term basis, provided the property meets the right standards and the rental income is sustainable.
What’s more, we offer day one remortgages which can unlock higher valuations based on the improved configuration, releasing capital tied up in the refurbishment and helping landlords to scale their portfolios more quickly. In such cases, we’re comfortable valuing the property with each room valued on a standard buy-to-let basis based on its post-works condition and income potential, provided this is supported by evidence of a landlord’s journey, such as schedules of works, invoices and photographs.
If you’d like to find out more about how we could help, get in touch with a member of our sales team who’ll be more than happy to discuss your cases.
George Gee steps into role as Chetwood Bank’s managing director of mortgages