Buyers exaggerated rental value on BTL mortgage - will surveyor say anything? Wondering if purchase will fall apart

[Propertyquestion1]

Hello,

New to this!

Our buyer has a buy-to-let mortgage in principle for the place we’re selling to them. They’ve exaggerated its monthly rental value in order to secure the mortgage.

A surveyor came today to see if its worth that amount.

Unsure if the surveyor will say it’s an exaggeration, or continue the lie? Don’t know how “honest” they are.

We’re in London. The buyers said the place was worth £3100 a month and it isn’t worth more than £2500. I know this because I had it valued recently and it’s easy to see when you look at compatibles anyway.

Basically: do the surveyors or the mortgage company care?

Asking because I’m wondering if this sale will fall apart!

Since a BTL mortgage is connected to rental value (rental income generally has to be at least 150% of monthly repayment), yes they will care and yes they will downgrade the amount they’ll loan or term they’ll lend over if the surveyor can easily demonstrate by desktop that there are no similar properties renting for as much as £3,100 a month.

That doesn’t mean the sale will fall through, if the buyer can still make the figures work.

Thank you, ComtesseDeSpair, 150% wow. I think our buyers may struggle. I know they almost didn’t get a mortgage so this one was a push for them.

I suppose it depends whether the surveyor will, ahem, lie?! (Or not care?)

The agent I most recently asked about our rental value said “it is definitely not worth over £2,500 and you’d be pushed to get that.”

If the sale falls apart, it’s fine, we’ll relist as we’re chain free (for now!!), but I definitely don’t want this sale to fall apart somewhere further down the line or for this whole thing to drag on.

Also - I’m guessing the answer is no - but is there anyway I can find out what the surveyor’s report is? Can I contact them and ask?

(Or do I have to wait for my buyers to contact the EA if things go wrong?)

Assuming this is the lender’s surveyor (?) coming out to value the property then the point of the survey is to ascertain that a) the property is worth the price being paid and b) that it will fetch a high enough rental income each month to cover the monthly repayments and more. The surveyor works for the lender, it’s their job to give an accurate representation, so yes they’ll care and they have absolutely no incentive to lie. It isn’t an exact science (which is why people sometimes get turned down by one lender and are then successful with another) but it doesn’t bode well that your buyer has either been dishonest in their application, or has made a completely unrealistic assessment of the market.

The valuation survey usually comes with a disclaimer about it being only valid for the person named in it (the buyer) and the lender. You could ask the buyer if you could see it, I suppose. If you already know from local agents and Rightmove etc what the local market is, it probably won’t tell you anything different, the surveyor will use more or less the same to assess the rental value.

Yes that’s right - it’s the lender’s surveyor. Although the surveyor didn’t seem to have all the information when he came and said “is this for your re-mortgage? So you can let it out?” I said no, we’re selling and he seemed confused by that, like he’d got the wrong information.

He stayed 10 mins - if that.

Ok I won’t ask the surveyor to see the report! (I have his details as he contacted me to arrange the survey.)

It’s a flat and, for £3100 a month, you’d get a nice house in this area. There are plenty of houses to rent at the moment for comparing, but not many flats - but you can quickly see (when you look at the few flats that are equal(ish) in size to ours - which is hardly anything and nothing of a similar layout) that it is not worth £3100 a month.