Increase your profits when flipping HMOs

Often C3 to C4 (small HMO) Article 4 directions are brought in to stem the creation of new small HMOs (less that 7 households) in a particular area, so when an upcoming article 4 direction comes into force, it means that any new HMOs will have had to go through full planning permission.

This immediately means that any existing small HMOs can achieve higher sale prices as there is suddenly a much shorter supply of new stock.

Using this to your advantage

1. Purchase a property within an upcoming article 4 direction.
2. Convert the property to a small HMO before the upcoming article 4 direction comes into force.
3. Get a certificate of lawful development for your conversion from the council. This can often be applied for before the refurbishment is complete.
4. Sell the new HMO to an investor giving them the certificate of lawful development during the sale.

You can sell at a often much higher price than the bricks and mortar value using this method and therefore increase your profits when flipping properties.

Notes

The certificate of lawful development is the council's stamp of approval that the conversion from C3 to C4 is legal and therefore ensures the new owner can operate it as an HMO.

Word of warning! For this to work you need to ensure you can complete the refurbishment well before the article 4 direction comes into force as if your refurb goes beyond the upcoming article 4 date, you will need to convert it back to a single use dwelling (C3) or apply for planning permission.

By using our Article 4 map to your advantage, you can quickly see any upcoming article 4 areas and you can plan ahead of these changes.

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