B2L market needs specialist surveys

15 March 2010

People don’t know what to think of buy-to-let lending at the moment. On one hand it has saved the property market from serious collapse as investors have taken the place of first-time buyers.

On the other, some still think buy-to-let represents higher risk and should be avoided at all costs.

As ever, the truth lies somewhere in between. A wise colleague recently reminded me that while buy-to-let is clearly a form of investment, no lender to his knowledge has ever asked for an investment-type valuation.

As lenders treat buy-to-let as a residential proposition valuation is done on a comparable basis.

But the support of a proper survey in addition to a valuation is a wise precaution.

Threats to the two strands of buy-to-let - rental income and capital growth - could be disclosed by a detailed valuation and a proper assessment of investment options.

Brokers striving to offer best advice to clients should seriously consider recommending this type of thorough investigation.

A survey will identify maintenance requirements that affect income and occupancy, while the valuer’s market knowledge will assist in predicting voids and long-term trends in value.

For example, difficulties may arise when investment value outstrips inherent occupier value. One of the implications of this is that if a local lettings market dives the value of the security may drop sharply. To be forewarned is to be forearmed.