Multi-Unit Freehold Blocks (MUFBs): Why They’re a Great Investment and How Bridging Finance Can Help
Multi-Unit Freehold Blocks (MUFBs) are becoming an increasingly popular investment choice for property investors and developers. These properties, which consist of multiple units (such as flats or apartments) on a single freehold title, offer significant financial potential due to the strong cash flow provided. When combined with the flexibility of bridging finance, MUFBs can be a highly lucrative investment. This guide explains why MUFBs are a great investment, how valuations work (including breakup value), and how bridging finance can help you secure and develop these properties.
What Are Multi-Unit Freehold Blocks (MUFBs)?
MUFBs are properties that contain multiple residential or commercial units under one freehold title. Examples include:
Blocks of flats or apartments.
Terraced houses converted into multiple units.
Mixed-use buildings with residential and commercial spaces.
Unlike leasehold properties, where ownership is time-limited, freehold properties provide full ownership of the land and buildings, making MUFBs a more attractive and secure investment.
Why Are MUFBs a Good Investment?
1. High Rental Yields
MUFBs generate multiple income streams from several tenants, leading to higher rental yields compared to single-unit properties. For example, a block of 10 flats can provide 10 separate rental incomes, significantly boosting cash flow.
2. Economies of Scale
Managing multiple units under one roof reduces maintenance and management costs. For instance, repairs and upgrades can be carried out more efficiently across the entire block.
3. Capital Appreciation
MUFBs often appreciate in value over time, especially in high-demand areas. Investors can benefit from both rental income and long-term capital growth.
4. Portfolio Diversification
Investing in MUFBs allows you to diversify your property portfolio, spreading risk across multiple units rather than relying on a single property.
5. Strong Demand
With rising demand for rental properties, MUFBs are a stable investment. They cater to a wide range of tenants, including students, young professionals, and families.
6. Breakup Value Potential
One of the most lucrative aspects of MUFBs is their breakup value. If the leases for each unit are separated and sold individually, the total value of the units can far exceed the value of the block as a whole. This strategy maximises leverage and can significantly increase returns.
How Are MUFBs Valued?
Valuations for MUFBs are based on several factors:
1. Rental Income
The primary valuation method for MUFBs is the income approach, which calculates the property’s value based on its rental income potential. Higher rental yields typically result in a higher valuation.
2. Location
Properties in high-demand areas with good transport links, schools, and amenities are valued higher.
3. Condition of the Property
Well-maintained properties with modern facilities attract higher valuations. Investors can increase the value of MUFBs by refurbishing or upgrading units.
4. Market Comparables
Valuers also consider recent sales of similar properties in the area to determine the market value of the MUFB.
5. Potential for Development
If the MUFB has potential for expansion or conversion (e.g., adding more units), this can significantly increase its value.
6. Breakup Value
The breakup value is the total value of the individual units if the leases are separated and sold individually. This approach can maximise returns, especially in areas with high demand for single-unit properties. For example, a block of 10 flats valued at £1.5 million as a whole could be worth £2 million if sold individually.
How Bridging Finance Can Help with MUFB Investments
Bridging finance is a short-term loan designed to provide quick access to capital, making it an ideal solution for acquiring and developing MUFBs. Here’s how it can help:
1. Fast Acquisition
Bridging loans can be arranged quickly, often within days, allowing you to secure MUFBs before other buyers. This is particularly useful for auction purchases or time-sensitive deals.
2. Refurbishment and Development
If the MUFB requires refurbishment or conversion, bridging finance can provide the funds needed to complete the work. Once the property is renovated, you can either refinance or sell it for a profit.
3. Bridging the Gap
Bridging loans can cover the gap between purchasing the MUFB and securing long-term financing or selling the property. This is especially useful if you’re waiting for planning permission or completing renovations.
4. No Valuation or Simplified Valuations
Some bridging lenders offer no valuation, Automated Valuation Models (AVM), or desktop valuations, speeding up the loan process and reducing costs.
5. Flexible Repayment Options
Bridging loans typically have flexible repayment terms, allowing you to repay the loan once the MUFB is refinanced, sold, or starts generating rental income.
6. Maximising Breakup Value
Bridging finance can be used to fund the separation of leases and individual sales of units, unlocking the full breakup value of the MUFB. This strategy can significantly increase your returns.
Benefits of Combining MUFBs with Bridging Finance
Quick Access to Capital: Secure funds fast to capitalise on investment opportunities.
Maximise Returns: Use bridging finance to refurbish, develop, or separate leases, increasing the property’s value and rental income.
Flexibility: Tailor the loan to your specific needs, whether for acquisition, refurbishment, or lease separation.
Short-Term Solution: Repay the loan once the property is refinanced or sold, minimising interest costs.
Breakup Value Leverage: Unlock the full potential of the MUFB by separating leases and selling units individually.
Ready to Unlock the Full Potential of MUFBs?
Whether you're looking to acquire your first Multi-Unit Freehold Block or scale your existing portfolio, bridging finance could be the key to faster deals and higher returns. At Aura Capital, we specialise in structuring flexible, fast, and investor-friendly finance solutions tailored to your project goals.
Get in touch today to explore your funding options, request a quote, or talk through your next MUFB opportunity with an expert.
📧 Email: enquiries@AuraCapital.co.uk
🌐 Visit: www.AuraCapital.co.uk
📝 Apply online: www.auracapital.co.uk/get-a-quote
Turn your next investment into your most profitable one yet.
