Avoid down valuation when getting a buy to let mortgage.

Buy-to-lets are a “business”, and in any business, you need to keep abreast of the competition or stand to lose out financially. In dense areas, buy-to-lets property values and rents can be viewed freely and easily on the Internet. Check out yours and other Letting Agency sites, Rightmove and Zoopla to name a few. As a rule of thumb, the Mortgage Lenders’ Surveyors will look at activity in the last 6 months.

Is there such to make you dream to secure your custom? Check the figures they give you by asking direct questions such as what the rent was paid by the previous tenants when they moved in and left. If the property is to be let for the first time can they demonstrate the monthly rental for a similar one on their books.

Encourage other Landlords to reassess rents as the market can set itself at a lower level through inactivity. This proactively can work very well in a block of flats. If they see them advertising give them a call and introduce yourself.

Mortgage Lenders will have commercial arrangements with preferred Surveyors or Agencies that “panel manage” on their behalf. There is also at least one buy-to-let lender who has their own Surveyor employed directly by them. If you have had a bad experience with a certain Surveyor take note of which party instructed them for future reference. Your Mortgage Broker may be able to provide ways to reduce the chances of getting the same Surveyor again.

It is easy to lose touch with the layout of the property. Does the property portray the right messages? Damp or loose wiring? Could there be any element of subletting such as locks on internal doors; multiple pairs of adult shoes on front door mats; a separate kitchenette in a bedroom; fold-up beds or sleeping blankets? And of course clean and tidy particularly in areas needing heightened hygiene.

If you are present at the Surveyor’s Visit make sure you draw their attention to concealed areas such as storage they make a difference in small flats in particular.
Be professional, knowledgeable and polite. Think carefully before “oversharing” information that could hinder your case. Remember this is to be a quick assessment so do not draw attention to failure areas that aren’t immediately evident. The best thing is to stick to answering the questions posed. And above, all do not pressurise or attempt to bribe them.

Make sure your tenancy agreement is signed by the current tenant and any subsequent renewals are documented.
Plan ahead. If you collect rent in cash make sure it’s deposited to your bank at the same time each month. Also, try and coincide planned rental increases in time for when your mortgage product renewal expires so you can show the Mortgage Lender at least one month of the new payment in the bank.

They can use PC desktop property valuations also known as automated valuation models or AVMs for short. These draw on recorded data either from Mortgage Lender’s own database or from a third-party market-wide source. Inactivity in the properties nearby or if the property is unique or has been extended will often throw the system”s results.
The Buy-to-Let Mortgage Lenders also may ask the Surveyor to look at the property from the outside i.e. a drive-by. 
If the Buy-to-Let Mortgage Lender has deployed either a desktop or AVM to assess the property valuation then you are at liberty to ask for a physical visit. They are likely to agree but there will be an additional charge.
The upside of a local Surveyor is they should know “soft facts” about the area such as a shopping centre is about to be transformed or high speed computer rail line is going in. They will also appreciate “high spec” rooms.

Surveyors are highly qualified and do not generally appreciate their professional judgment is called into question. Buy-to-Let Mortgage Lenders in my opinion play “lip service” and say you can appeal a property value or rental figure however they lay out terms of an appeal which are very hard to obtain. A typical stance would be to provide three like-for-like properties as comparables within the same street with better figures in the last six months. Even then the Surveyor will have the counterargument and research on record to support the original verdict.
In my opinion “nothing ventured nothing gained” and I would support a reasoned appeal but expect disappointment and time to be lost as they’re rarely successful.
More accommodating Buy-to-Lenders may appoint a second Surveyor on request provided you cover the cost but this is uncommon and a split decision carries its own problems.
So rather than appeal, you may conclude on balance it’s better to cut your losses and move onto a new Buy-to-let Lender or property.

Just because you are willing to pay a certain figure it does not follow the Surveyor will conclude its worth that much. The Buy–to-Let Lender will go by the Surveyor’s figure and this could lead to an increased deposit. For example, if the buy-to-let mortgage product has a maximum loan-to-value at 90%LTV, and you are buying at £100,000 initially they may have lent £90,000 with £10,000 deposit. If the Surveyor instead values the property at £90,000 they will only lend £81,000 so the deposit will rise to £19,000.
What this scenario of down-valuation does throw up is the opportunity to go back and challenge, with grounds, the vendor’s price.

Certain Buy-to-let Mortgage Lenders offer a pre-valuation assessment ahead of valuation. This is more around the property type and their exposure in development rather than property value or rental figures but helps you decide on whether the asset is a good investment and mortgage.

“Whitewashing” might be a tried and tested method of improving tenancy occupation but don’t be fooled into thinking the Surveyor will up the property value as a result of your efforts. Only significant changes such as high-spec kitchens and bathrooms, adding a drive and converting a garage or an extension are likely to catch the eye.
So as we draw this article on buy-to-let valuations and pitfalls to a conclusion I focus on “rental downgrades” to remind you of the lessons learnt and offer other practical solutions: