The DIP request looks clean until the licence tab. Five rooms. Strong rent. A bridging loan sized to the purchase. Then credit opens the council PDF and finds an expired mandatory licence, a selective scheme the covering email never mentioned and no gas certificate dated inside twelve months. The file does not die on LTV. It stalls on papers the landlord already knew about.
StatusKWO prices short unregulated commercial facilities for professional and corporate property borrowers only. Published terms currently show a monthly rate from 1.25%, an entry fee of 2%, an exit fee of 1.5%, LTV up to 85%, loans from £10,000 to £10,000,000+ and terms up to 16 months. Those are schedule figures. They are not a promise that every multi-let prices at the floor.
The licence gap that stalls a multi-let DIP
Income alone does not underwrite a shared house. A rent roll pack can look tidy while the occupation itself is unlawful. Credit will not average those two stories. They take the weaker one.
Our older HMO bridging overview covers product fit. The conversion note covers works and Article 4 risk at a high level. This page is narrower. It is the licensing evidence that should sit in the first zip for a multi-let or HMO bridge, whether the exit is refinance, sale or a later portfolio line.
Start the enquiry with one page. Address and title number. Occupancy headcount. Households. Shared amenities. Named licence type if known. Council area. Gross and net loan. Term. Exit. Then attach the licence papers before the colourful floor plan. Credit can read a floor plan in five minutes. They cannot invent a licence number from a broker email.
A missing licence is not a soft compliance point. GOV.UK’s public house in multiple occupation licence page is blunt. Large HMOs need a licence. Councils set fees and conditions. An unlimited fine sits on the public page for renting an unlicensed HMO. Term lenders read that page too. So does the solicitor who has to give clean title and lettable use opinions before completion.
The same gap appears on already-owned stock. A landlord who has traded for years without a Part 2 licence still brings that risk into a refinance bridge. Credit does not treat historic occupation as proof of lawful use. They treat the current papers. If the council has already written, attach the letter. Silence is not comfort.
Mandatory additional and selective schemes credit must separate
Brokers lose days when every council document is labelled “HMO licence”. The regimes are not the same. Credit needs the correct label on page one.
Mandatory licensing for large HMOs in England is national. GOV.UK describes a large HMO where five or more people form more than one household, some or all share toilet, bathroom or kitchen facilities and at least one tenant pays rent. Storey count no longer decides the point after the 2018 reform. The prescribed description guidance for local housing authorities records that Parliament extended mandatory licensing beyond the old three-storey rule. A two-storey five-person shared house can sit inside the mandatory regime. Treat storey count as a floor-plan detail, not a licensing escape hatch.
Additional licensing is a local designation under Part 2 of the Housing Act 2004. It usually catches smaller HMOs the national mandatory test does not reach. A three or four person share in a designated street can need a Part 2 licence even though it never hits five occupants. Do not assume “small HMO” means “no licence”.
Selective licensing is different again. MHCLG’s selective licensing guide for local authorities sits on Part 3 of the same Act. It can catch privately rented homes in a designated area whether or not the property is an HMO. A single-let flat inside a selective scheme still needs its Part 3 licence. A shared house inside the same map may fall under mandatory or additional rules instead. Credit wants the map check and the scheme name, not a guess.
Put the scheme type in the one-page summary. Mandatory Part 2. Additional Part 2. Selective Part 3. None, with a dated council confirmation. If two names appear on different PDFs, say why. Passporting between schemes after the 2018 reforms still confuses packs. Spell the history in one paragraph rather than hoping the underwriter reverse-engineers it.
Wales and England do not share every detail. StatusKWO’s day book is England and Wales commercial security, but council portals still differ. Always name the local authority on page one. A generic “HMO rules apply” line wastes a day while credit looks up the wrong map.
Student clusters and professional shares can sit under the same mandatory test once headcount and households clear the threshold. Do not argue that a professional let is somehow outside licensing because the tenants work. The public test is occupation and amenities, not job titles.
Papers that prove the licence not a covering email
Credit wants documents that survive a solicitor. A screenshot of a council homepage does not.
Send the current licence PDF with the address matching the title. Licence number. Licence holder. Maximum occupants. Maximum households. Conditions. Issue date. Expiry date. If the licence is in the managing agent’s name, explain the fit and proper position and who will hold the licence after completion. A purchase that moves the holder can force a fresh application. Put that clock on page one.
If an application is pending, send the application receipt, the fee payment evidence and any written council acknowledgement. Pending is underwritable when the timeline fits the bridging term and the exit. Pending with no receipt is a story.
Temporary exemption notices and management orders need the actual notice, not a verbal summary. They change who controls the asset. They also change how a refinance exit will read.
Match the licensed address to the Land Registry title. Flat numbers that drift between the licence, the AST and the charge plan create legal delay. If two flats share amenities across titles, draw it. Do not leave credit to invent a single HMO from two freeholds.
For a conversion still under works, say whether the licence is for the end layout or for the current occupation. A licence written for four rooms does not cover a six-room end scheme. The same gap kills many refinance packs after the bridge.
If the borrower is buying with vacant possession and will apply after completion, put the application plan in the first email. Who applies. Which SPV holds. When the fee is paid. What works must finish before the council will inspect. A bridge that funds the purchase and then waits indefinitely for a first-time licence is a different risk from a bridge against a live licensed book.
Fire safety electrical and amenity evidence beside the licence
The licence is the permission layer. Safety certificates are the hold case. Term lenders ask for both. So does a specialist desk that expects a refinance exit inside sixteen months.
GOV.UK’s HMO licence page expects gas safety certificates to be kept current, smoke alarms to be installed and maintained and electrical appliance certificates to be available when requested. Put those papers in the first pack. A gas certificate older than twelve months is a question. A missing alarm layout on a three-storey share is a question. Questions are delay.
Room sizes and amenity ratios belong next to the floor plan. The 2018 reform guidance for local housing authorities is clear that licensed HMOs face prescribed minimum sleeping-room sizes and refuse conditions. If the council’s local amenity standards sit above the national floor, attach that standard or a written confirmation. A marketing plan that labels a box room as a double will be cut by the valuer and then by the exit lender.
Waste storage, communal kitchen capacity and bathroom ratios are not interior-design notes. They decide whether the licensed headcount is real. If works are needed to meet those standards, put a costed schedule beside the licence. A round “£40k for compliance” with no contractor is how files bounce between bridging and development finance.
Keep fire doors, escape routes and detection on a one-page schedule. Photographs help when the asset is tired. They do not replace the certificates. Credit will still ask for the papers.
Managing agents often hold the certificates. That is fine. The pack still needs copies under the correct address. An agent portal export with no property identifier is a starting point. It is not the finish. If the agent changed last month, chase the outgoing agent’s folder before valuation day.
Article 4 planning versus Housing Act licensing
Planning use and Housing Act licensing are separate tracks. Brokers mix them constantly. Credit will not.
A property can need planning permission for C4 or sui generis use and still need a Part 2 licence once occupied. It can also be lawfully C4 under permitted development and still need a mandatory licence because five unrelated people share amenities. One track does not cancel the other.
GOV.UK planning guidance on when permission is required is the public starting point for Article 4 directions that remove permitted development rights. Where a council has made an Article 4 direction on C3 to C4 changes, planning permission is required for a small HMO that would otherwise have been permitted development. Seven or more occupants usually sit in sui generis territory and need planning permission even without an Article 4 map. Our planning permission note for lenders still applies. Put the decision notice or the lawful development certificate in the pack when the exit depends on lawful HMO use.
Do not bury an Article 4 problem inside a licensing folder. Label the planning papers separately. A granted Part 2 licence does not cure an unlawful change of use. A planning consent does not remove the duty to hold the correct Housing Act licence.
Auction stock needs both checks before the hammer. Catalogue wording that says “ideal HMO” is marketing. The legal pack and the council map decide the file. Auction finance clocks do not pause for a post-completion licence application that should have been priced on day one.
If planning is refused or an enforcement notice sits on the title, stop calling the asset a refinanceable HMO. It may still be a sale-led bridge at a different LTV. Honesty on day one is cheaper than a valuation that assumes lawful multi-let use the planning file cannot support.
How licensing risk changes LTV term and the refinance exit
Licensing risk rarely moves like a simple haircut on day-one LTV. It usually hits term, interest method and exit quality first.
An occupied licensed HMO with clean certificates and a named refinance product can sit closer to published maxima. StatusKWO’s published maximum LTV is 85%. Live multi-let files often sit lower once works, lease term, licence expiry and exit quality are in the number. An unlicensed occupation, an expired licence or a pending application that may run past the bridging term pushes credit toward a shorter hold, more retained interest or a lower advance until the licence position is proven.
The exit is where licensing bites hardest. A sale exit needs a buyer who can take on or reapply for the licence and a marketing story that matches lawful use. A refinance exit needs a term lender that will accept the same occupation, the same headcount and the same SPV. An AIP written for a single-let BTL product is decoration on a five-person share. Match the exit product to the licensed use before you ask for a twelve-month term.
If the licence expires inside the proposed term, put the renewal plan in the enquiry. Fees. Inspection windows. Who holds the licence after any SPV change. A bridge that ends two weeks after expiry with no renewal path is an exit problem wearing a completion date.
Works that create extra lettable rooms change the licensed headcount. Price the facility on the licensed end state you can evidence, not on the marketing headcount. If the end state needs development drawdowns rather than a short bridge, say so early. Mixing a heavy conversion into a light multi-let bridge is how packs stall between desks.
Adverse credit on a proposed licence holder is its own thread. Fit and proper tests sit with the council. Put any known issues in writing with the first pack. Waiting for the council letter on week four burns the valuation window.
Cross-charge and multi-title files need the licence story on every shared house in the security, including charged rentals that are not the purchase asset. A clean target HMO does not rescue a charged rental that has been trading without a Part 2 licence. Credit will price the book they can enforce against.
How brokers should send the pack to StatusKWO
Use the same discipline as a general bridging pack. One zip. Named files. Contents list at the top.
Include the one-page deal summary. Current or pending licence PDF. Council scheme confirmation if the map is not obvious. Gas, electrical and alarm evidence. Floor plan with room sizes. Tenancy schedule and three months of rent credits where the asset is already let. Planning decision or Article 4 map print where relevant. Title and existing charge list. Borrower and guarantor identity. Source of funds for the deposit or equity. Named exit with dates.
Start with the decision in principle engine when you already know the loan, term and security. Attach the licensing folder in the same go. Do not wait for credit to ask for the obvious council PDF. Brokers who send the licence first get fewer question loops.
Keep collecting while the DIP is out. A renewed gas certificate, a council acknowledgement or a corrected licence holder name can land in the same week as the valuation. Files that pause for a perfect pack often miss the week when the refinance still worked.
Professional landlords who keep licences, certificates and room schedules current send faster multi-let bridges. The desk notices. The licence is not a side letter. It is how shared-house income becomes underwriteable security.
If the file is part of a wider portfolio refinance later, keep the same folder structure across titles. Credit hates rebuilding five different licence naming conventions when the book is already charged. Consistency today saves a week on the take-out.
Frequently asked questions
Does every three-person share need a mandatory HMO licence?
No. Mandatory licensing for large HMOs turns on five or more people forming more than one household with shared amenities, as set out on GOV.UK. A three-person share can still need an additional Part 2 licence or a selective Part 3 licence if the council has designated the area. Check the map before you submit.
Can StatusKWO price a bridge while the HMO licence application is pending?
Sometimes, when the receipt, fee evidence and timeline sit inside the proposed term and the exit still works. Pending with no paper trail usually waits. Unlicensed occupation that the borrower intends to ignore is not a bridge StatusKWO will dress up.
Is planning permission the same as an HMO licence?
No. Article 4 and use-class planning decide lawful change of use. Housing Act licensing decides whether the occupation can be let under Part 2 or Part 3 rules. Many files need both. Send both sets of papers with clear labels.
What safety certificates should sit in the first pack?
Current gas safety evidence, smoke and heat detection details and electrical paperwork the council or exit lender will ask for. Missing certificates slow the hold case even when the licence PDF looks fine.
Where should brokers start with StatusKWO on a multi-let file?
Open a decision in principle with the address, headcount, loan, term and exit, then attach the licence folder, certificates, floor plan and rent evidence in one submission. A clean licensing pack is faster than a long covering story.
