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Rental income down valuations affecting

buy-to-let mortgage applications

Buy-To-Let Mortgages Refused As Surveyors Down Value Rental Income

Buy-To-Let Mortgages Refused As Surveyors Down Value Rental Income

Approvals for buy-to-let mortgages are failing because surveyors are ‘down valuing’ the expected rental income from the private rented sector and are advising mortgage lenders accordingly.

In some cases, surveyors are even down valuing the value of rent already being received by landlords.

The claims were made last weekend in a Sunday Times feature, which says that some buy to let mortgage lenders are rejecting landlords’ rental estimates.

Most buy to let mortgage lenders want to see monthly mortgage repayments covered by rent with a 25% excess, to cover expenditure and void periods. Some lenders want to see 130% of rental cover, while others are happy with 100%.

Down valuation of the potential rental income could result in the refusal of the buy to let mortgage application, or lenders may limit the amount they will offer, often below the borrower’s expectations.

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No regulation for UK letting agents

UK Gov Refuse To Regulate Letting Agents

The UK Government has said it does not believe that all letting agents should be made to have client money protection insurance and belong to an Ombudsman scheme, despite being warned of a spate of crooked letting agents.

In response to a letter written by Peter Bolton King, the Chief Executive of the Association of Residential Letting Agents, (ARLA), the Con-Dem Government confirmed its stance in a reply from the Department of Communities and Local Government.

Mr Bolton King had written to the UK Housing Minister, Grant Shapps, pointing out some of the recent cases involvinging a number of letting agents who went out of business taking money belonging to landlords and tenants with them.

Many property professionals have called for a suitable Ombudsman scheme, even though the Government has repeatedly said it does not want to regulate letting agents, despite some ongoing and notorious cases of theft and fraud.

The Government response said:

“As you are aware, the lettings industry is not subject to statutory regulation; however, it is in the interests of the industry to maintain consumer confidence in the services provided and we look to organisations such as NFoPP [National Federation of Property Professionals, of which ARLA is a part] to take a lead in that work. As part of this, the Department continues to explore with its industry partners how best to counter poor practice by letting and managing agents without resorting to regulation. As you will also be aware, between a third and a half of agents belong to voluntary schemes which ensure that members have the right protections for consumers in place. We always suggest that anyone considering using a letting agent checks to see that they belong to a trade body or accreditation scheme such as the Association of Residential Letting Agents, (ARLA), the National Association of Estate Agents, (NAEA) the National Approved Letting Scheme, (NALS) or the Royal Institution of Chartered Surveyors, (RICS). In view of the existence of well developed voluntary regulation in the sector, Ministers do not believe that regulation is the answer at present. But they are keeping a watching brief, and information about poor practice is always useful in that context.”

Mr Bolton King said: “While I am pleased that they continue to understand the benefits of using one of our members, they are clearly not yet swayed by the argument that all lettings agents should have Client Money Protection insurance and belong to a redress scheme.”

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