Buy To Let - valuation problem?

htb

I am in the process of getting a BTL mortgage for a reposessed property, which is a fab deal at the moment. I am putting 25% down and I am purchasing it for about £15k below market rate...

There is about £1500 of cosmetic work to be done, (internal doors, one new window, painting, carpets and re-connecting the services - all can be done in a week!)

Unfortunately the valuers put 'unfit for letting in its current condition - needs basic cosmetic work but fit for mortgage lending.' It even quoted neighbouring properties valuation rate (emphasising the reasonable purchase price).

The lenders/underwritier have focused on the 'unfit' bit and have said I will need to complete the works in between 'exchange of contracts and completion' and have another valuation to pull down the final payment in order to complete.

I have been in touch with the valuers who said they are happy to rephrase the report if the lenders will accept it (I havent got an answer to that one yet), they said they have not taken the full report into context.. and are appalled (yu;d think they would know the implications of how they word things)....

I don;t think the asset management company 'selling' the property are going to allow me in between exchange and completion to do work, and Im not thrilled with it either.. I am on the verge of losing money to the solicitors and the £280 valuation fee.

When I asked what works needed to be done for it to be considered 'fit' for letting by the lender, I was told painting and hanging 3 internal doors and gettign the services switched on!
has anyone else been in this position? and did you get around it?

Is there a recommended lender out there for BtL apart from the building society that isn;t giving Xtra to me, except grief and stress!!!

holly_hobby

I think the problem is that although it is fit for mge purpose if you were going to live it for example, under a BTL mortgage (and especially if the affordability was assessed on the rental income) - the lender expects you to already have a tenant ready to move in on completion and paying rent from that time.

In my opinon, I think the way the UW is viewing this matter is if they allow you to complete with the property condition as it is "just how long will it be before you have it fit for letting", and then "how long to find a tenant" ... they are valid points from a lenders point of view, as whilst these delays are in place you are paying the mge from your own capital and not rent.

I don't think its the lender being picky or awkward - as I think if any BTL underwriter read the report they would do the same - as it is their role to protect the lender where possible.

I know you would rather avoid, but the only solution is to explain to the company the situation and that the sale depends upon it - I would really get in there and do the works between exchange and completion (or ask the seller/company to do this even if they charged you). Following which the valuer can re-inspect when the property is ready, and duly sign off that the cited works have been completed - and that the property in their opinion is now of satisfactory letting standard. You could then proceed to completion as planned.

Other than that, and as discussed above, I think you'll find it difficult with any lender, as I suspect all valuers will make the same comments.

Hope this helps

Holly

htb

Thanks Holly, but the asset company /seller arent interested in the hassle and..... its too good a buy - they have other interested parties, so I am likely to be gazumped with the delay.

I have tenants ready and the work would take a couple of days, they have been told all this and it doesn;t matter to them. My other BTL lenders have never questionned me in terms of having tenants in place (and previously I never had them in place).

The surveyor says it is not 'lettable' because of the services not being connected and as you say it is standard in their reports for most repo's... its not unlettable because it has 2 internal doors missing and needs a lick of paint.. they are going to contact the lender direct and say they have misinterpreted and focused on one word rather than the sentence that qualifies the statement and gives the fuller picture. They have offered to rewrite the report, so fingers crossed.

Both the solicitors, agents and the surveyors say they have never heard such nonsense from a lender - they are standard reports, with standard language and it wouldnt be so bad if they put a retainer on... that wouldnt be a problem for me... but the access before completion is just not possible and then organising another valuation before completion! Makes me want to scream, all this with 25% equity as security...

holly_hobby

Whats hysterical about that is there are doors that need to be hung etc, but the only reason the lender wants to withhold funds is because the services aren't yet connected ... IMHO this should be easily overturned by the surveyors intervention.

Gosh you sound like Rigsby with your "portfolio" , and its a good job in this case that you have the experience and clear head, to question the lender and their "interpretation" of the facts !!!

I'll keep my fingers crossed ...

Holly