Rent Assesment Report - BTL

GMS

The lender employs a valuer to ascertain the value and security of the property for their purposes, including the rental income.

This will be the figure they use for calculations. If there is a slight discrepancy then you could try to appeal but usually the valuers figure cannot be challenged.

If you can rent for higher than they think then this obviously works in your favour going forward but if you need higher than they say to get the loan then their attitude would be that it is not affordable and unsuitable for their security.

ziof3ster

GMS wrote: »

The lender employs a valuer to ascertain the value and security of the property for their purposes, including the rental income.

This will be the figure they use for calculations. If there is a slight discrepancy then you could try to appeal but usually the valuers figure cannot be challenged.

If you can rent for higher than they think then this obviously works in your favour going forward but if you need higher than they say to get the loan then their attitude would be that it is not affordable and unsuitable for their security.

Thanks for your answer

I've read that the rent assesment is ok to challenge. You should provide 2 agency declaring that they assess the rent in the area for that size of property at another amount (in my example highter). Will help if they have property rented with same size/area ath the rent they assess.

Also, if the surveyor assess the property "as it is", the simpler thing possible to do is update it and keep it in line with the property market.
Because a BTL is not an investment for just 6months but on a long term, an update/refurbishment is perfectly reasonable.

A valuer that assess a property in need of updates "as it is" is doing, in my opinion, an evaluation on a short term against an investment that is on a long term.
I think that this is not correct.

I understand lender with "Light Refurbishment" mortgage, pushing these properties on this product (so assessing on the state as it is), but I dont understand lenders those dont have these products, those should assess the rent based on the market value for same size/area kind of properties.

RBS for example confirmed me (the mortgage consultant on the phone) that they assess the rent for the property "as it is" as you in this forum already explained.

I will check with Halifax and few more to try to understand if all of them do in this way.

thanks
Gio

GMS

ziof3ster wrote: »

Thanks for your answer

I've read that the rent assesment is ok to challenge. You should provide 2 agency declaring that they assess the rent in the area for that size of property at another amount (in my example highter). Will help if they have property rented with same size/area ath the rent they assess.

Also, if the surveyor assess the property "as it is", the simpler thing possible to do is update it and keep it in line with the property market.
Because a BTL is not an investment for just 6months but on a long term, an update/refurbishment is perfectly reasonable.

A valuer that assess a property in need of updates "as it is" is doing, in my opinion, an evaluation on a short term against an investment that is on a long term.
I think that this is not correct.

I understand lender with "Light Refurbishment" mortgage, pushing these properties on this product (so assessing on the state as it is), but I dont understand lenders those dont have these products, those should assess the rent based on the market value for same size/area kind of properties.

RBS for example confirmed me (the mortgage consultant on the phone) that they assess the rent for the property "as it is" as you in this forum already explained.

I will check with Halifax and few more to try to understand if all of them do in this way.

thanks
Gio

Lenders will base on the security offered, not what might/could/will/possibly/probably happen.

Light refurb in TMW and they will not allow a challenge. Valuers figures are final.

You can't expect a lender to advance further funds on a future possibility. If/when rents and values rise you could look at further borrowing.

On day 1 it is down to what is in front of the lender.

Agreed it is a long term thing but you need to be cautious. You have said (in this thread or another) that you are paying 5k arrangement fee. If you needed to change product to release more funds you could be hit with more fees and/or Early Repayment Charges meaning a huge chunk of money wiped out.

If you have worries over rent/affordabilty walk away.

ziof3ster

GMS wrote: »

Lenders will base on the security offered, not what might/could/will/possibly/probably happen.

Light refurb in TMW and they will not allow a challenge. Valuers figures are final.

You can't expect a lender to advance further funds on a future possibility. If/when rents and values rise you could look at further borrowing.

On day 1 it is down to what is in front of the lender.

Agreed it is a long term thing but you need to be cautious. You have said (in this thread or another) that you are paying 5k arrangement fee. If you needed to change product to release more funds you could be hit with more fees and/or Early Repayment Charges meaning a huge chunk of money wiped out.

If you have worries over rent/affordabilty walk away.

Thanks for your answer GMS.

The 5k as arrangment fee is part of the TMW option the agency broker showed me.

As you know they keep 3.5% of the borrowing so it easy to be asked these amounts (this doesnt mean I will go with this option of course).

In my specific case the flat is in need of modernization, I can fund that easly without ask for any loan etc.

The options (very few as a not whole market broker) showed me were

TMW with very low rate (massive fees)
Natwest a slightly highter rate, and a standard fee of 2k.

Done my math, in this very initial stage, I was up for Natwest.

The problem is on the Rent Assessment because

TMW calculate it on 125% of interest only at 4,99% (them variable rate after 2 years term)
Natwest calculate it as 125% of repayment at 6.75% (this rate is them value in case the BoE goes up etc).

This means that the minimum rent required is much lower for TWM.

In both cases, if the property was in good state, not problem rent for that amount.

For this flat, TWM will push me on the "light refurbishment", that for a First time Landlond like me, requires a 65% LTV (wiping off the money I want spend to refurbish). If Natwest assess the rent as it is now, won't achieve the 125% they calculate.

Of course I'll consult a whole market broker for a solution that fits me, but is very annoying that the lenders act in this way, when I can easy refurbish it paying the rate myself in a month, or ask for a lower rent (still covering the 125% of TWM) without be pushed to crazy "light refurbishment" things.

Thanks.
Gio

GMS

'IF the property was in a good state then no problem'

Harsh fact is that it isn't. Lenders call the tune not the borrower.

You can argue all you like with it but you need to meet lender criteria.

As a first time landlord your options will be restricted. What is your earned income?

Seemingly you have been presented with the options but do not like them and want to create your own product from them.

If you are struggling to meet criteria then consider if it is worth it. Paying a 5k arrangement fee because it is the only one that fits on affordability is absolute madness. If you were doing it for the rate then understandable.

Can you really afford this business venture?

ziof3ster

GMS wrote: »

'IF the property was in a good state then no problem'

Harsh fact is that it isn't. Lenders call the tune not the borrower.

You can argue all you like with it but you need to meet lender criteria.

As a first time landlord your options will be restricted. What is your earned income?

Seemingly you have been presented with the options but do not like them and want to create your own product from them.

If you are struggling to meet criteria then consider if it is worth it. Paying a 5k arrangement fee because it is the only one that fits on affordability is absolute madness. If you were doing it for the rate then understandable.

Can you really afford this business venture?

Done different affrodability chat with different lenders and I can afford this property at 75% LTV with no problem.

The question is not my affordability, so the 5k are to get a mortgage with a lower rate to match the 125% criteria, and not because I cannot afford to pay something at an higter rate.

The flat is in central london, in an area that I know very well (I live next door) with an immediate capital gain (other similar properties on the block have fetched a good 50k more). In terms of rent, once refurbished (repainted, new bathroom, kitchen, etc) will do easily (no property on the market here for less than double the amount I'm going to pay as mortgage rate) double/triple the mortgage rate.

Investment to refurbish everything? Around 10-15k.

How I know all of this? as I said I live next door, bought a similar property (in this case not a BTL but first time buyer), refurbished for just over 10k, rented 2 rooms for 1.5k net pcm.

So trust me, this is worth it (ofcourse I dont want everyone see it as a very good investment, otherwise everyone will make a lot of money :-))) )

Thanks
Gio

GMS

Living next door could kill the deal.

Have you told the lender you live next door? Is it attached?

ziof3ster

GMS wrote: »

Living next door could kill the deal.

Have you told the lender you live next door? Is it attached?

Next door to say very close. Is the block in front of mine.

Thanks
Gio

GMS

What is your earned income?

I hope you get a resolution. Good luck

ziof3ster

GMS wrote: »

What is your earned income?

I hope you get a resolution. Good luck

Sent you a message about my income.

Thanks for all your help. Much appreciate.

Gio