What does MUFB mean?
Advanced buy to let investment strategies
Sean Horton
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A multi-unit freehold block, or MUFB, is a building that contains a number of separate residential units which are all owned under a single freehold title.
An MUFB, or MUB, is a building that contains a number of separate dwellings which are all owned under one freehold title. This type of property investment is becoming increasingly popular with experienced investors as they diversify away from single buy to lets.
There are a number of advantages to investing in a MUFB, such as the potential for higher rental returns and capital growth. Additionally, investors are able to benefit from the economies of scale that come with owning multiple properties within a block.
If you’re thinking of investing in a MUFB, it’s important to do your research and seek professional advice to ensure that it’s the right investment for you.
So what does a multi-unit freehold block look like?
There’s a few different possibilities, but the main thing to remember is that there can only be one freehold title.
- a block of self-contained flats
- a row of terraced houses
- a large property that has been converted into flats
None of these flats or houses will have their own individual lease.
Each dwelling should be self-contained and can therefore be rented out to different tenants, with their own individual Assured Shorthold Tenancy (AST) agreement.
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MUFB characteristics
All rentable units should have:
- Its own private bathroom
- Its own separate kitchen
- A separate and private entrance
- Separate AST
- Separate utilities
Communal areas will often exist with an MUFB, hallways or corridors and gardens are good examples of these.
From the perspective of the tenants, they should not see a difference between a flat within an MUFB or a leasehold flat within a normal block. In both scenarios they are renting their own private dwelling.
Why would an investor want an MUFB?
It’s fair to say that a multi-unit block is for landlords that have had at least some experience letting either single units or perhaps an HMO. But the benefits are tangible and it can make for an excellent long-term investment.
YIELD
MUFB’s tend to have an excellent yield, much better than a standard or single buy to let.
DEMAND
Multi-Units are popular with many different types of people and can be more appealing than an HMO.
CASHFLOW
With multiple units being rented the exposure to any voids is shared between the other units, so even if one flat is empty there is income received from the others.
LICENSING
A multi-unit freehold block does not require a licence to let the units out. Unlike an HMO. So the landlord can benefit from the economies of scale but without the burden from HMO legislation.
Is this the same as an HMO?
No, Houses in Multiple Occupation (HMO) are different in a few ways.
HMO’s often have shared kitchens and occasionally shared bathrooms, although many new HMO’s will now have en-suite facilities.
Tenants have their own private bedroom and the utilities are paid by the landlord and included within the rent.
However, it is possible to let out a property within a multi unit block as an HMO.
What’s the tax situation?
MUFB’s do not have any special or different tax consequences. They are simply taxed as a normal investment property. Ownership can be as an individual, jointly owned or owned via a limited company or SPV.
What type of mortgage is needed for a MUFB?
Mortgage finance is readily available with specialist lenders who understand an MUFB and how they work.
With smaller blocks of 4 dwellings or less, finance is essentially by way of a buy to let mortgage that allows the definition of an MUB. For larger blocks finance is provided by the more specialist buy to let lenders and also commercial lenders.
We would recommend using an experienced mortgage broker who fully understands multi-unit blocks.
What are multi-unit holiday lets?
This is a style of holiday let accommodation where more than one property or dwelling is contained within the freehold title. There are many variables on how this may look but a farmhouse with converted barns and outbuildings would be a good example of a multi-unit holiday let.
Read more about Multi-Unit Holiday Lets
Also in this section
Buy to Let Guide
Buy to Let Remortgages
Limited Company Buy to Let
Multi-Unit Freehold Blocks (MUFB)
This post first appeared on Respect Mortgages - Be In The Know, please read the originial post: here
