What Is An MUFB In Property Investing?

The acronym “MUFB” is an abbreviation for the term Multi Unit Freehold Block. It is used in property investment and finance to refer to a block of self contained flats or apartments held on a single freehold title. This is not the same thing as a House in Multiple Occupation (HMO), in which facilities are shared.

A block of 6 separate apartments, all owned by one landlord on a freehold title, would be classed as an MUFB.

MUFB or HMO, and why lenders care

The distinction decides which lenders will look at the property and how it is valued. In an MUFB each unit is self contained, with its own kitchen, bathroom and front door, and could in principle be sold separately. In an HMO the occupants share facilities and the building is let room by room.

That matters because a valuer will report an MUFB on two bases: the aggregate value of the units sold individually, and the investment value based on the rent the block produces as a whole. Lenders almost always apply the loan to value to the lower figure, which on a block in a weaker rental area is usually the investment value. Borrowers who budget against the aggregate figure are the ones who get caught out at valuation.

Getting a mortgage on an MUFB

It is possible to get a buy to let mortgage on an MUFB, usually up to a maximum loan to value of 75% to 80%. Which lender fits depends mainly on the number of units:

Up to 4 units. Widest choice. Most specialist buy to let lenders will consider it on a standard product.
5 to 10 units. Narrower. A specialist multi-unit product, often with a different stress test and a lower loan to value.
More than 10 units, or a loan above £1 million. This is commercial territory and is usually funded by a commercial lender rather than a buy to let one.

Article 4 directions, planning use class and whether the units have separate titles or sit under one all change the answer, and no two lenders treat them the same way.

For the full picture on rates, criteria and which lenders take these, see our page on multi unit freehold block mortgages. For blocks over 10 units or loans over £1 million, see commercial mortgages. If the block needs work before it can be mortgaged, refurbishment bridging is the usual route in.

Bolton Business Finance is a whole of market commercial finance broker. Call 0161 546 9128 to talk through a block.

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