Executive Summary
This property offers excellent volume and character, ideal for a high-end HMO conversion. Given the location in Moffat, the target demographic is likely to be commuters, seasonal workers, or professionals. While the property requires significant capital expenditure to meet fire safety and amenity standards, the potential return on capital employed (ROCE) is high. We recommend a 5-bedroom configuration to maintain high standards and minimize licensing friction.
Projected Rental Income (Post-Refurb)
Total Monthly Gross
£2,500
Projected Cashflow & Returns
Monthly Expenses (30% void/mgt/util)£750
Mortgage Payment (1% int)£158
Net Monthly Cashflow£1,592
Return on Capital Employed (ROCE)19.1%
Licensing & Compliance
- Mandatory Licence (Scotland): Yes (Required for 3+ unrelated sharers).
- Additional/Selective Licence: Not applicable beyond standard HMO.
Note: In Scotland, HMO licensing triggers at 3+ unrelated people. This project must register as an HMO immediately upon conversion.
Property & Layout Analysis
Bedroom 1 (Half Landing)
Size: ~14.6m²
Pass Bedroom 2 (1st Floor)
Size: ~21.9m²
Pass Bedroom 3 (1st Floor)
Size: ~18.4m²
Pass Attic Room 1
Size: ~17.4m² (Combed)
Pass Attic Room 2
Size: ~19.2m² (Combed)
Pass Refurbishment Plan
Scope: Full HMO conversion: New fire doors (FD30), mains-interlinked alarms, emergency lighting, kitchen fire suppression, and bathroom upgrades.
Key Tasks:
- Install interlinked fire alarm system - Cost: £1,200
- Fit 6 x FD30 Fire doors with intumescent strips - Cost: £2,400
- Kitchen upgrade (HMO compliant regulation) - Cost: £8,000
- Bathroom refurbishment (tiling/sanitary) - Cost: £5,000
- Emergency lighting installation - Cost: £800
- Full property painting & decoration - Cost: £4,000
- Furniture packs for 5 rooms - Cost: £4,500
- Carpet/Flooring replacement - Cost: £3,500
- Plumbing/Heating service - Cost: £1,000
- Electrical certification (EICR) - Cost: £400
- Fire signage/extinguishers - Cost: £300
- Landscaping tidy (rear garden) - Cost: £1,500
- Garage clearance/securing - Cost: £800
- General contingency - Cost: £5,000
- Architect/Plan/Licensing application fees - Cost: £3,000
Total Estimated Refurb Cost: £41,700
Refurb Timeline:
Weeks: 12 || Months: 3
Negotiation Points
EPC Rating E: The property will need significant energy efficiency upgrades (insulation, heating) to be rentable long-term. Prob: 80%
Victorian Maintenance: Sash and case windows and historic masonry require ongoing maintenance costs. Prob: 60%
Attic Ceiling Height: Ensure headroom complies with HMO standards for bedroom use (combed ceilings). Prob: 50%
Investment Case Summary
Short Recommendation
Proceed with caution. The property is structurally ideal for a 5-bed HMO. Perform a thorough survey on the attic headroom before purchasing to ensure it meets bedroom standards.
Detailed Recommendation
This is a solid BRR (Buy, Refurbish, Refinance) opportunity. The property size allows for 5 spacious rooms. The key risks are regulatory (HMO licensing in Scotland is stringent) and the EPC rating. Ensure the 1% interest rate assumption is stress-tested against current market rates. If you can negotiate the price down by £15k due to the EPC E rating, the ROCE improves significantly.
HMO · Property Analysis