At iLA, we’re big on connection. Beyond delivering expert Independent Legal Advice, we believe in adding real value to the property community.
Here you’ll find our three pillars: Education, Press and Podcasts — each designed to inform, support and elevate the people we work with
Find out more below.
In this week’s episode of ILA On Air, Anastasia sat down with Gary Stewart of Blox Finance to explore HMO conversions from start to finish.
Rather than focusing on surface-level strategies, the conversation broke the process down into four practical pillars. From finding the right property to refinancing at the end of a project, each stage highlighted the level of detail required to make a deal work.
For many property professionals, HMOs are often discussed as a way to increase yield. What became clear in this conversation, however, is that they also introduce complexity, risk and operational demands that need to be understood early.
Below are some of the reflections Anastasia took from the discussion.
The first pillar focused on acquisition, which Gary described as one of the most complex stages of the entire process.
Finding a property suitable for HMO conversion involves far more than simply identifying space. Planning requirements, licensing, build costs and projected values all need to be considered before a purchase is made.
One of the key constraints discussed was Article 4, which restricts HMO development in certain areas. While this is often seen as a regulatory hurdle, the reasoning behind it is practical. Increased occupancy leads to increased pressure on infrastructure, particularly parking and traffic flow.
What stood out here was that acquisition is not just about finding a property. It is about finding one that works within planning, location and financial constraints simultaneously.
The second pillar focused on financing the purchase, typically through bridging loans.
While bridging finance is often perceived as slow or complicated, Gary explained that the process itself can be relatively quick. In many cases, funding can be arranged within a few weeks.
The main cause of delays is rarely the lender. It is usually the borrower.
A lack of preparation, such as missing documentation, unclear project costs or incomplete financial information, can significantly slow down progress.
The key takeaway here was simple. Speed in property transactions does not come from rushing. It comes from preparation.
Having a clear schedule of works, financial clarity and a structured plan allows deals to move efficiently through the funding stage.
The third pillar shifted focus to development and the operational reality of HMOs.
Unlike a standard buy-to-let property, an HMO involves managing multiple tenants, multiple agreements and ongoing operational considerations.
Gary described this as the difference between owning an asset and running a micro business.
This distinction becomes particularly important for those entering the space for the first time. Attempting large-scale projects without prior experience can introduce unnecessary risk.
The comparison used during the conversation was simple. Moving from no experience to a large HMO is similar to going from driving a standard car to a Formula One vehicle.
The learning here was not to avoid HMOs, but to scale into them carefully. Starting with smaller projects allows systems, processes and experience to develop over time.
Another key part of the conversation focused on the development phase itself.
Even with a strong plan in place, projects can encounter challenges. Planning permissions may not be granted as expected. Build costs can change. Contractors may not deliver as planned.
Small oversights can also create significant issues. Room sizes, ceiling heights and compliance with building regulations all play a role in whether a property can be signed off correctly.
What stood out here was how often risk comes from assumptions rather than major mistakes.
The takeaway was clear. Attention to detail is not optional in development projects. It is fundamental to achieving the intended outcome.
The final pillar focused on refinancing the completed property.
For many HMO investors, the goal is to secure a commercial valuation based on rental income rather than the property’s original purchase price.
However, this outcome depends heavily on decisions made at the beginning of the project.
Factors such as layout, number of bathrooms and overall specification influence whether a property qualifies for a commercial valuation.
One key concept discussed was that the property needs to be sufficiently specialised. In other words, it should be designed in a way that makes it unlikely to revert back to a standard family home.
Another important consideration is location. Even a well-designed HMO may struggle to achieve a commercial valuation if there is oversupply in the area.
This reinforced a central theme from the episode.
The exit strategy should not be an afterthought. It should shape decisions from the very start.
Alongside the four pillars, another consistent theme was the importance of having the right people involved.
Brokers, solicitors, builders and property sourcers all play a role in the success of a project.
Gary emphasised that trying to minimise costs by choosing the cheapest option can often lead to delays or mistakes later on.
What stood out here was the idea of a “power team”.
Having experienced professionals in place before starting a project can significantly reduce risk and improve outcomes across every stage.
This episode was not about positioning HMOs as a simple strategy for increasing returns.
Instead, it highlighted the level of planning, structure and awareness required to execute them successfully.
For Anastasia, the biggest takeaway was that every stage of an HMO project is connected.
Acquisition, finance, development and exit are not separate steps. They are parts of a single process that needs to be aligned from the beginning.
This article is based on Episode 9 of ILA On Air, where Anastasia speaks with Gary Stewart about HMO conversions, bridging finance and structuring projects from start to finish.
Listen to the full episode here:
https://open.spotify.com/show/114c5xCQSdAkwCLYpFDGHb
If you work in property or are exploring HMO strategies, the episode offers a practical perspective grounded in real-world experience.
Making the complicated simple.
This is not advice from iLA. It is simply a helpful summary of conversations shared on ILA On Air, our educational podcast for the property finance community, making the complicated simple.
