BTL rental down valuations - what's going on!

[samosamo]

Heard lots of examples lately of surveyors valuing the rent at lower than what is actually being achieved. What is going on here?

Are the lenders telling them to be cautious?

If a property has been getting x rent for 2 years and is on another 12 month tenancy, why value it at x-£100 pcm?

And surveyors about to give some insight??!!

That’s interesting, I think they think the market will cool. I don’t know much about the rental market but the buying market is going crazy. Are buyers getting down valuations for mortgages as well?

Maybe, so they give a forecast and not the current value?

Because it doesn't work the other way. No one gets a valuation of more than is being paid whether for rental or purchase even when the market is going up!!!

The surveyor assumes what would be achievable if a new deal was agreed today. So if the lease that was agreed a month ago is higher than the rent in the valuation the surveyor is saying the market rent has dropped in the last month.
And yes, you do see situations where the assumed rent will be higher than the current rent.

The valuation is grounded in sentiment rather than fact, then. It's anyone's guess then I suppose.

No, it’s a surveyors guess, based on their training and experience and analysis of the current market.

We own rental properties and have definitely had valuations higher than the rent we were getting and lower than the rent we were getting.

It’s an analysis of what rent you’d be likely to get if you were agreeing a new tenancy on the day of the valuation.

Right now rents are dropping in lots of areas as people realise they can work from home more so move out from the city centres.

@samosamo

The valuation is grounded in sentiment rather than fact, then. It's anyone's guess then I suppose.

Not really anyone’s guess, the estimation of trained professionals after market analysis

I’ve been on the receiving end of a “this house is too cheap” valuation. It triggered a money laundering investigation which delayed our purchase by a month. Horrible because I was pregnant at the time. In fact it was nothing more sinister than a very motivated vendor who was emigrating.

Yes it is hard to understand the reasoning- if it's the rent you are getting now and for the foreseeable future then that is the market rent!
However I've never had this - when I've taken out a BTL mortgage (or i think they call it a remortgage if you already own the property) I've just had to show them the tenancy agreement stating the rent. I don't recall them then surveying it for rental value, only for the value of the actual property.

But if your current tenant could give 4 weeks’ notice at any time then it makes sense for the bank to know what it would re-let for.

We’ve only had these kind of valuations done when we are mortgaging other properties and it’s part of the assessment of our overall assets.

In this case it was valued at £100 less pcm than the LHA.

So, not very valid imo. It didn't hurt my refinance at all, but it just made me think it's not s very good method whatever one they use!

One of our flats has dropped in value by 250pcm, because it’s in Canary Wharf and most of those city workers left, there’s thousands of empty flats round there so tenants can haggle. That’s life.