With one HMO almost up and running, Holly tells us how she had to pull out of two further sales due to unforeseen restrictive covenants, but already has a replacement property exchanged.
"During our purchase mentoring, we were fortunate to go sale-agreed on three properties. However, we discovered that the two town houses (which happened to be on the same street) had restrictive covenants in place which meant that only one household could live in the dwelling.
We'd done a lot of due diligence on the properties and the solicitor had already started the searches and received the title deeds, yet found nothing. It wasn't until the legal pack came from the vendor's solicitor some weeks later that we found an additional document which contained the restrictive covenant.
To try and avoid withdrawing our offer, we decided to contact the building firm who had developed the estate and put the restrictive covenant in place. We explained what we wanted to do and the standard of accommodation we were going to provide and even offered to pay an administration fees involved in lifting the covenant, but they refused.
We therefore had to pull out from both sales, but luckily for us, both vendors were really understanding. One had another buyer within a week. The vendor of the other property was willing to challenge the building firm on lifting the covenant, as he was aware of other properties on the estate already operating as HMO's. Unfortunately, the building firm were still unwilling to lift the covenant. We offered to proceed with the sale if they struggled to sell - it just meant that we'd have to rent it as a single occupancy buy-to-let or sell it on. Thankfully, they sold the property shortly after.
But on a more positive note, we found another suitable property which we have just completed on!
It's a much older property, so there aren't any restrictive covenants that we need to be worried about but it will require a lot more work, which is kind of exciting. It's a large 1970s four-bedroom detached house and it needs gutting - rewiring, central heating, the works.
Our plan is to convert it into a seven-bedroom HMO but we'll operate it as a six-bedroom property first. This will give the neighbours some time to get comfortable and understand the standard of accommodation we provide and the kind of tenant we cater for. We'll then need to apply for planning for the seventh bedroom.
We're converting the garage and building a 4x4m extension onto the back of the house under permitted development. We'll also have to remove a downstairs toilet, as in its current location it wouldn't pass building regulations - it makes the entrance to the property very restricted. In addition, we're probably going to relocate the front door. What is the existing kitchen will become a bedroom and we'll split the large lounge into two. The front part will become a bedroom and the back part will form the communal living space along with the extension. Upstairs there are four bedrooms and a shower room which we will convert into four en-suites bedrooms.
The expected time frame from the builders is 15 weeks, so if everything goes to plan then we should be ready to tenant by the end of January, as the builders have a couple of weeks off over Christmas. Once the project is up and running, we'll start looking for house number three!
