The Intermediary – March 2026 - Flipbook - Page 63
BRIDGING
Opinion
The bridging
behind HMO deals
A
s landlords adapt to
a changing market,
many are focusing on
strategies that deliver
stronger yields and
more efficient use
of capital. Two investment types that
consistently aract interest are houses
in multiple occupation (HMOs) and
multi-unit freehold blocks (MUFBs).
Both property types offer the ability
to generate multiple rental streams
from a single asset, making them a
popular route for investors looking to
maximise rental yields. For brokers
working with experienced landlords,
these are now a familiar part of
portfolio expansion strategies.
However, HMOs and MUFBs
oen require a different approach
to funding. This is where bridging
continues to play an important role.
A key strategy
HMOs and MUFBs appeal primarily
because of the income potential they
offer compared with standard singlelet properties. HMOs allow landlords
to rent individual rooms, typically
generating higher overall rental
income. Demand remains strong in
many towns and cities where students,
young professionals and key workers
seek affordable accommodation.
MUFBs offer a slightly different
structure, but a similar outcome. A
building containing multiple selfcontained flats under a single freehold
title provides several income streams
while maintaining full control. For
many investors, this also provides
operational efficiencies compared
with managing multiple separate
properties.
Both allow landlords to diversify
income across multiple tenants,
reduce the reliance on a single
occupier and increase overall yield.
Speed is often critical
In reality, many HMO and MUFB
opportunities do not fit neatly into the
timelines associated with traditional
mortgage lending.
Properties may be purchased
at auction, acquired quickly in
competitive markets, or require
refurbishment before they qualify for
longer-term buy-to-let (BTL) finance.
In these situations, access to shortterm funding that can be arranged
quickly is oen essential.
Bridging loans provide landlords
with the speed and flexibility needed
to secure properties quickly, complete
refurbishments or restructure
portfolios before transitioning to
longer-term finance.
For brokers advising property
investors, bridging is commonly
used in several key scenarios when
acquiring HMOs or MUFBs:
Fast acquisitions: Investment
properties with strong HMO
potential or existing MUFB
structures can aract significant
investor interest. Bridging enables
landlords to move quickly,
particularly where auctions or
competitive offers are involved.
Refurbishment and conversion:
Many HMO investments involve
reconfiguring a property to increase
leable rooms or meet licensing
standards. Bridging can fund both
the acquisition and refurbishment
stage before the property is
refinanced once fully operational.
Similarly, MUFB purchases may
involve upgrading individual units
or improving communal areas
before transitioning onto longerterm lending.
Unlocking capital through second
charges: Experienced landlords
oen have significant equity within
existing portfolios. Second charge
bridging loans allow investors to
release capital without disturbing an
existing mortgage.
Because HMO and MUFB transactions
can involve more complex
considerations, brokers oen work
NINA KAINTH
is business development
manager at Mercantile Trust
with specialist lenders that understand
the nuances of these investments.
A pragmatic underwriting approach
can be particularly valuable where the
property requires works, where the
structure of the asset is more complex,
or where landlords are building
larger portfolios.
At Mercantile Trust, we regularly
support brokers and landlords with
both first and second charge bridging
loans designed to facilitate these types
of transactions.
HMOs and MUFBs remain a
popular route for landlords looking to
maximise returns and rental yields,
and bridging finance can play a key
role in helping investors secure these
properties quickly. By providing
short-term funding with a clear path
to longer-term refinance, bridging
allows landlords to act decisively when
the right opportunity arises.
For brokers working with
professional landlords, the key is
ensuring that the funding structure
matches the pace of the transaction.
Bridging finance is not simply
about speed; it is about enabling deals
that might otherwise be difficult
to complete within traditional
lending frameworks. Whether it is
securing a property quickly, funding
improvements, or unlocking equity to
pursue a new acquisition, bridging can
provide a practical solution.
As landlord strategies continue to
evolve, HMOs and MUFBs are likely
to remain central to many investment
portfolios. In a market where timing
and flexibility oen determine
whether an opportunity is secured,
bridging finance will continue to
play an important role in supporting
landlords – and the brokers who
advise them. ●
March 2026 | The Intermediary
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