Article 4 HMOs and sui generis HMOs: what they mean for your mortgage

An Article 4 HMO is a house in multiple occupation in an area where the council has made an Article 4 direction. Normally a family home can become a small HMO for three to six people without planning permission. An Article 4 direction removes that right, so the change of use needs a planning application.

The right being removed is the permitted development right to change a house from use class C3 to C4 (GPDO 2015, art. 4 and Sch. 2 Part 3 Class L). An article 4 direction for HMOs doesn't stop them altogether: it means the council decides each new one through a planning application. Existing HMOs that were lawful before the direction took effect can usually continue.

For a buyer or landlord, the article 4 HMO question is really a lending question, because lenders check the planning position before they lend. The lending tests themselves, such as deposit, rental cover and licensing, are covered in the guide to HMO mortgages. These rules are for England; Wales, Scotland and Northern Ireland have their own planning and HMO laws.

Check the council's website for an Article 4 map or list, search its planning register for the address, or ask its planning department. A conveyancer's local search also shows Article 4 directions. For an existing HMO, ask the seller for the planning permission or a certificate of lawful use, because lenders will want it.

Many councils publish an article 4 HMO map showing the boundary of each direction, and some offer an online Article 4 HMO checker by postcode. HMO article 4 areas are often around universities and town centres, but there is no national list, so check the council for each address. Note the date the direction took effect, because evidence that the house was already an HMO before that date matters later.

A sui generis HMO is a large HMO with seven or more residents. It falls outside the C4 use class, so it always needs its own planning permission, wherever it is. Sui generis HMOs usually also need a mandatory licence, and many lenders treat them as large or commercial HMOs, with a separate set of criteria.

Sui generis means 'of its own kind': the use doesn't fit any class in the Use Classes Order 1987, so any change to or from it needs permission. That is why sui generis HMO planning permission is needed even outside Article 4 areas. A sui generis HMO mortgage is usually a specialist or commercial product, because standard HMO products often stop at six bedrooms.

Planning status can change the value a lender works from. In an Article 4 area, existing lawful HMOs are harder to create, which can support an investment valuation. A sui generis HMO is more often valued on its rental income. Without the right evidence, a valuer may value the house only as a family home.

To see how rent and room count feed a figure, try the HMO valuation calculator. Valuers use a vacant-possession approach, based on sales of similar houses, or an investment approach, based on the rent (RICS valuation of buy-to-let and HMO properties, 2nd edition). The lender decides which basis it accepts, and that choice can move the loan more than the rent itself.

Before buying an HMO in an Article 4 area, confirm it has planning permission or a certificate of lawful use, check the licence and its conditions, and make sure the room count matches both. If you plan to convert a house, apply for planning permission first; a lender won't lend on a planned HMO use without it.

The guide to refurbishment and conversion finance sets out each stage of a conversion, from planning to the refinance. In an Article 4 area, HMO planning permission comes before any finance for the works, and the conversion itself is usually funded short term.

Ask your conveyancer to check the planning history, any enforcement notices and the council's licence register, and ask the seller for tenancy records and council tax history if the HMO use predates the direction. Gaps found after exchange are hard to fix and can stop the mortgage offer or delay completion. A broker can check which lenders accept the evidence you have: compare brokers who handle HMO cases before you apply.