1. Buy to Let Valuations James Ginley – Technical Director
Legal & General Surveying Services

2. Buy to let. Basis of value Market value Market rent
‘the estimated amount for which an asset or liability should exchange on the
valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.’
Market rent
‘the estimated amount for which an interest in real property should be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.’
Per calendar month
Single family occupancy
On the assumption that the property is to be let on an unfurnished basis in its current condition.
On a single 6 month Assured Shorthold Tenancy (AST)

3. Policy differences between lenders
Houses in Multiple Occupation (HMO)
Owner occupier demand in the locality
Number of bedrooms (e.g. maximum of 5)
Multiple Tenancies
No more than 5 unrelated sharers on a single tenancy agreement
Holiday Lets
Houses in Multiple Occupation (HMO)
Owner occupier demand in the locality
Number of bedrooms (e.g. maximum of 5)
Multiple tenancies
No more than 5 unrelated sharers on a single tenancy agreement
Holiday lets

4. Case Law in 2013 Relationship between valuer and BTL Investor
The relationship between the surveyor and the customer is not the same for a BTL as a mortgage valuation.
The surveyor does not owe the BTL investor a duty of care.

5. PRA Regulations.
Firms should assess any rental income by taking into account rental demand and typical rent levels within the property’s locale.
Expected rental income should be verified by a suitably qualified valuer who is independent of the borrower, automated valuation models or evidence of an existing rental agreement, subject to appropriate policies, controls and risk management.
 ‘The PRA’s supervisory statement outlines minimum expectations that firms should meet in underwriting buy-to-let mortgages, specifically:
FOR VALUATION REQUIRMENTS
RISK MGT –
LIVE CASES
RISK MGT –
CASE
SIGNOFF
(Slide 4)
PRA Regulations
‘The PRA’s supervisory statement outlines minimum expectations that firms should meet in underwriting buy-to-let mortgages, specifically:
Lending to portfolio landlords (defined by the PRA as being those with four or more mortgaged buy-to-let properties) should be assessed using a specialist underwriting process.’
Lenders approach
LGSS BTL rental verification
Comparing properties against Zoopla/ Rightmove
Assess passing rent

6. PRA Regulations. Interpreting –
Interpreting –
Independent process
Policies, control and risk management
Rental demand in the local?
LGSS BTL rental verification solution
Comparing properties against Zoopla/ Rightmove
Assess passing rent – combining an AVM
 ‘The PRA’s supervisory statement outlines minimum expectations that firms should meet in underwriting buy-to-let mortgages, specifically:
Lending to portfolio landlords (defined by the PRA as being those with four or more mortgaged buy-to-let properties) should be assessed using a specialist underwriting process.’
RISK MGT –
LIVE CASES
RISK MGT –
CASE
SIGNOFF
(Slide 4)
PRA Regulations
‘The PRA’s supervisory statement outlines minimum expectations that firms should meet in underwriting buy-to-let mortgages, specifically:
Lending to portfolio landlords (defined by the PRA as being those with four or more mortgaged buy-to-let properties) should be assessed using a specialist underwriting process.’
Lenders approach
LGSS BTL rental verification
Comparing properties against Zoopla/ Rightmove
Assess passing rent

7. Specifics for Rental Properties
Physical inspection- property must be habitable
Suitable condition for letting
Fire safety
Gas Safety (Installation and Use) Regulations requirements of landlord to obtain gas safety check annually
April rental properties in England and Wales must have an EPC rating of E or above
(Slide 5)
Specifics for rental properties
Physical inspection- property must be habitable
Suitable condition for letting
Fire safety
Gas Safety (Installation and Use) Regulations requirements of landlord to obtain gas safety check annually
April rental properties in England and Wales must have an EPC rating of E or above

8. Scottish Rent Control. RISK MGT – LIVE CASES Rent Pressure Zones
Rent Pressure Zones
The Private Housing (Tenancies) (Scotland) Act 2016 enables a local authority to apply to Scottish Ministers to designate an area as a Rent Pressure Zone (RPZ) if they can demonstrate that rents in that area are rising too much, causing undue hardship to tenants and having a detrimental effect on the authority’s broader housing services.
Unintended consequence:
Landlord in the zone not improving property or only to the extent that cost is recovered.
Resulting in lower standard of accommodation in RPZ
Costs incurred as a result of government requirements, for example
Scotland’s Energy Efficiency Programme (SEEP) and the proposed Local Heat and Energy Efficiency Strategies (LHEES). Requirements are likely to have a consequential impact on landlords BTL mortgage affordability- issue of key interest to lenders.
The draft Improvement Cost guidance sets out guideline figures for the additional amount of rent a landlord in an RPZ might be able to charge for improvements they have made to their property.
RISK MGT –
LIVE CASES

9. Thank you Any Questions
Include what winning the business means to you.