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I'm trying to finance my first holiday let purchase and the rental yield valuation lenders require has come in much lower than I expected based on similar properties close by, and based on their previous valuations. Should I:
- try another agent for a valuation - are there any other than Sykes?
- get them out to the property to see it (they'll only do this after an offer is accepted)
- accept it as they never change their mind
- do something else?
Any help appreciated, I'm weighing up whether to make an offer today and it's a fab property that won't hang around I reckon
Thanks in advance!
Hi Eliza,The lender will send out their own valuer, so I would suggest that you put together a pack of your own comparables from the local area.I do not believe that lenders use the likes of Sykes Cottages for their own valuation.Furthermore, the lending will be partly based on your income, so not solely based on what rental income the property may achieve.You may find this video helpful:
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
Thanks Amanda for replying so quickly!
I have found that the Principality does look to rental valuations aside from the actual property sale valuation, at least at the start of the process of the mortgage application. They lend based on the average annual rental income X 145% at a specific interest rate (as a stress test). My income counts for something and is a part but not the whole of their assessment
It's Vanessa. I have found that the Principality does look to rental valuations aside from the actual property sale valuation,All lenders will do that, and obtaining holiday let finance was discussed at length in the video I included in my reply.I would suggest that you still obtain comparables for both single occupancy let and holiday let and put together a pack for the valuer.If there is any form of down-valuation, you can still purchase the property - you will just have to put in a larger deposit.As a general and anecdotal trend, I think many valuers are being cautious in the current economic and market conditions, and are therefore down-valuing, so I would advise you to expect that.See - Insights: Lender's survey & down-valuations
yes I watched the video a while back, useful definitely.
I'll compile a dossier for sure...this has worked for me in the past on a BTL mortgage where the property was down valued. I've found a N Wales holiday owners Facebook group and they have good suggestions for alternative agents to provide rental estimates
Hi, we operate in Mid Wales......what is the name of this Facebook group please?
Hi Orson, it's a closed group but the moderators are very responsive.
The name is 'Owners Chat snowdonia and north wales holiday cottages'
It is strictly non commercial and is enforced as such
The rental yield calculation is something the lender normally asks you to organise via the letting agent. You need to contact the letting agency personally and tell them what you are trying to achieve. If its 5* then the letting agency should be able to mark up the rental valuation accordingly.
Cottages.com or Welsh country cottages / English Country cottages are the largest in the UK. They are worth a go.(*Moderator note: Content removed for being a commercial promotion which is against our T & C's*).
thanks John - I found them today and am in touch. Useful.
Although lenders prefer to use their own panel, if there are compelling reasons you can persuade them to use the likes of Sykes. However there is usually a deduction for costs (say 20%). In one I did recently that worked in our favour. But of course it all depends on the property. If the lenders want more comfort there is probably a reason and I suggest you make sure you are not blurring the lines between the business of holiday letting and the joy of having your own holiday home.
I am a mortgage broker and tax advisor. If you are struggling please feel free to give me a shout - 0203 907 7022 or firstname.lastname@example.org
Chartered Accountant, Tax Advisor and Mortgage broker
(and BTL portfolio owner)