A multi-unit freehold block (MUFB) is typically a number of independent residential units owned under a single freehold.
Advantages of a MUFB
- MUFBs are more lucrative for investors than other forms of rental property because they provide economies of scale. In addition, multiple tenancies provide enhanced income opportunities over single occupied property and help smooth out cash flow to cover rental voids.
- Creating separate titles for each unit allows individual sales to provide a more significant ROI on the original investment.
- Along with HMOs, MUFBs have a greater capacity for increased rental yield than any other BTL investment category.
Examples of multi-unit freehold blocks
- Purpose-built blocks of flats without individual leases
- Houses converted into flats without individual leases
- Multiple houses on one freehold
MUFBs can also be operated as a combination of single self-contained units that are operated as HMOs. For example, a block of flats where the flats are used as HMOs.
Typical characteristics of a MUFB
- Each unit within the MUFB has its own AST agreement
- Each unit is self-contained and has a separate entrance
- Each unit has separate food preparation and bathroom areas
MUFBs can have common areas that all residents have the right to use, such as a hallway or garden area, which will be stipulated within the AST.
Taxation is in line with the treatment of all other rental properties.
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