The AI buy-to-let “associate”.

This paper assesses a £240,000 interest-only BTL facility at 75% LTV to fund the purchase of a fully tenanted, licensed 6-bed HMO at 14 Oak Road, Headingley, Leeds LS6, for £320,000. The borrower is Mr. Tobi Adeyemi, sole director of Adeyemi Property Group Ltd (Co. No. 11204587), an SPV holding four existing BTL units in Leeds and Wakefield. The property produces £2,580 per month (£30,960 per annum) across six individually let rooms and carries a mandatory HMO licence valid to March 2028.

The strengths are unusually aligned. Stressed cover of 234% at 5.5% is the highest in this cohort and holds at 161% even under an 8% stress — the deal passes every ICR test in the market without top-slicing. The gross yield of 9.7% is roughly double the single-let equivalent in the same postcode. Critically, Headingley sits inside an Article 4 direction: no new HMOs can be created without planning consent, so the existing C4 use is a protected, scarce asset with a defensible rent premium rather than a commodity exposed to new supply.

The residual risks are operational rather than financial: HMO licensing compliance is a continuing obligation with real penalties (rent repayment orders of up to 12 months' rent for breach), and the tenant base is concentrated in the student and young-professional market, which turns over annually. Both are management questions, and the sponsor's four-unit track record plus an instructed managing agent with an HMO book answer them. Room-rate softness of even 15% would still leave cover at 199% at the 5.5% stress.

Following rebuttals, the borrower supplied the current HMO licence with its conditions schedule and the managing agent's terms of engagement, and clarified that five of the six rooms are pre-let for the forthcoming academic year with guarantors in place. All three clarification points were resolved with documents rather than assertions. The paper is confirmed at A and we recommend proceeding to terms with a specialist HMO lender, conditional on a valuation on an investment (room-by-room income) basis, verification of the licence conditions, and sight of the six ASTs at completion.

The security is a freehold, standard-construction 6-bed licensed HMO in Headingley, Leeds LS6 — one of the UK's most established student and young-professional lettings markets, anchored by two universities within two miles. The property holds a mandatory HMO licence (six occupants, valid to March 2028) with fire doors, interlinked alarms and amenity standards certified at the last inspection, and an EPC rating of C. Headingley is subject to an Article 4 direction removing permitted development rights to create new HMOs, which caps competing supply and makes the existing C4 use a protected asset in its own right.

All six rooms are let on individual ASTs at £410–£450 per room per month, fully tenanted at completion, with five of six rooms already pre-let for the next academic year on 12-month terms with parental guarantors. Room-by-room letting diversifies the income: a single void removes roughly 17% of rent, not 100% as on a single-let. As a freehold there is no service charge or ground rent; the landlord bears utilities and broadband (circa £4,200 per annum), which is already reflected in the net income analysis below.

Aggregate passing rent is £2,580 per month, £30,960 per annum, across six rooms. At the 5.5% stress, annual interest on the £240,000 loan is £13,200 (£240,000 × 5.5%), giving an ICR of 234% (£30,960 ÷ £13,200) — far above the 145% higher-rate threshold and the highest cover in this ten-paper set. At an 8% stress, interest is £19,200 and cover still stands at 161% — this deal passes the harshest test in the market at full leverage.

Sensitivity is equally comfortable on the income side: rent could fall 38% to £1,595 per month before breaching 145% at 5.5%. Deducting landlord-paid utilities of £4,200 per annum, net income of £26,760 still covers stressed interest 203% — HMO papers should always be read net of bills, and this one survives the adjustment without strain. The cover is so wide that the binding constraint on this deal is valuation methodology (see lender questions), not affordability.

The applicant vehicle is Adeyemi Property Group Ltd (Co. No. 11204587), an SPV incorporated 2018 with correct lettings SIC codes. Filed accounts to 30 June 2026 show rental turnover of £54,300 from four background units (two single-lets in Wakefield, two 4-bed student lets in Burley), net assets of £173,000 and retained profit of £28,900. All four background units pass a 145% background stress at 5.5% on evidenced rents; blended background LTV is 66%.

Mr. Adeyemi has three-plus years' landlord experience including two student lets, so the seasonal-letting cycle of this market is familiar rather than theoretical. Personal and company credit are clean. A Leeds managing agent with a 200-unit HMO book is instructed at 12% including tenant-find — the agent's HMO-specific compliance service (licensing renewals, alarm testing schedule, right-to-rent checks) is a material mitigant given rent repayment order exposure on licensing breaches.

The strategy is a long-term hold for yield with refinance at the end of the 5-year fixed term. Cover this wide refinances in any realistic rate environment — even at an 8% stress the deal passes higher-rate thresholds today — so product-end refinance risk is genuinely low rather than nominally low. The Article 4 scarcity effect supports the investment valuation over time as competing HMO supply is planning-constrained.

Secondary exits are dual-track: sale as a going-concern licensed HMO to the deep Leeds investor market (Article 4 protection is a selling point, and licensed 6-beds in LS6 trade quickly), or — the downside case — reversion to a single-family let, which local agents estimate at £1,395 per month. Even that worst-case reversion covers stressed interest at 127%, above the basic-rate floor, meaning the deal does not go underwater even if the HMO use were somehow lost. Few HMO papers can evidence a fallback that survives the stress test; this one can.