LLH - A Beginners Guide to MUFBs

What is a Multi-unit Freehold Block?

A multi-unit freehold blocks (MUFB) is a single freehold property which has been split up into multiple self-contained units. Each unit will have separate entrances, kitchen, and bathroom areas, and they can have shared areas such as hallways and outdoor spaces.

Some common examples of an MUFB include:

• A purpose-built blocks of flats

• Houses converted into flats

What are the differences between an HMO and MUFB?

The main differences between HMOs and MUFBs are that MUFBs are self-contained units that have individual lease agreements in place and separate entrances, kitchens, and bathroom spaces.

Houses in multiple occupation (HMOs) are residential properties that are shared by 3 or more tenants, from at least 2 or more households. The tenants have individual rooms but share facilities such as a kitchen, communal rooms, or bathroom, each with their own individual lease agreement (usually per room).

For more information on HMOs and the benefits of having one, click here:

Benefits of a MUFB

• They generally offer higher rental yield: Having multiple tenancies increases potential income opportunities compared to single occupied properties. Generally, a MUFB will have a higher rental yield than a traditional single occupancy Buy-to-Let property.
• There’s a lower risk of Void Periods: As there are multiple tenancies running during the same period, the loss of a tenant will not be as detrimental in comparison to single-unit Buy-to-Let properties. Although the landlord will experience a dip in income, the landlord will still receive rent from other units within the MUFB.
• Units can have separate titles created: Landlords may decide to split the titles of individual units and sell each unit individually.

Challenges for a MUFB

MUFB properties can be a complex investment. That means finding finance can be challenging as appetite from hight street banks for lending on these kinds of property is limited.

Converting single-occupancy properties into MUFBs can be time consuming. In addition, landlords may also need to obtain planning permission which will cost time and money.

As a result, landlords may need to wait some time before they can start letting the units and making profit.

• Maintenance costs can build up. Managing MUFBs can be costly, and landlords must be prepared to cover any maintenance costs, especially in the event that multiple units require funding.

• The MUFB market is growing but still somewhat limited. There are a limited number of MUFB investors, and it may be difficult to sell these properties in the future, which is one of the main reasons high street lenders are reluctant to lend on these properties. Careful consideration should be taken before choosing to invest in an MUFB.

How can West One help?

• We do HMO and MUFB lending to first-time landlords, with no prior BTL experience required

• MUFB lending even if property is to be rented on holiday/short-term let basis

• Available for UK-based and expat landlords through limit company SPV or personal names

• Lending on MUFBs up to 10 units (including partial blocks) – with over 10 units possible through our Bespoke BTL Service.

• If a charge can be placed against the freehold of the entire residential block, we have options to lend

• We have no minimum income requirements.

• We do no additional rate loading for limited company applications

• Specialist underwriting is provided on all applications

• Lending up to 75% LTV

For more information on our MUFB product range please get in touch with the West One team.

T: 0333 123 4556

E: BTLbrokersupport@westoneloans.co.uk

W: www.westoneloans.co.uk/buy-to-let