How do I calculate the GDV for a HMO?

GDV for a HMO can be quite tricky. The nature of the HMO can have an impact on the method of valuation used to calculate a HMO's GDV. Firstly, the useclass of the HMO should be identified. HMOs often fall under use class C4 or sui generis. When looking at use class C4 HMOs, which are HMOs with 6 or less bedrooms, the method of valuation will often vary on the features of the HMO. Generally speaking, smaller HMO's without professional features such as En Suites and Kitchenettes are more commonly valued as bricks and mortar valuation, where the property is looked at similarly to a use class C3 (residential) dwelling, and valued based on like for like comparables where other non HMO houses may be used as direct comparables, therefor potentially calculating a lower GDV. Given that the HMO consists of five to six bedrooms, and has rooms with professional features such en suites and kitchenettes, the likelihood of obtaining a commercial valuation increases, but is still not guaranteed. Commercial valuation for a HMO is where the valuation takes into consideration the total rental income, often times the rental cost and the local yield to reverse engineer the GDV. For example, a net profit of �10,000 in an area with local net yield of 10% would imply a GDV of �100,000. From seven bedrooms and above, this is where HMOs establish themselves as a use class sui generis asset. At this stage, HMO's are commonly valued with more emphasis on the commercial valuation.