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Demystifying the specialist buy to let journey
The words complex and specialist are often used in the intermediary market, particularly in the buy to let (BTL) sector. But are these terms still relevant, or have they become barriers that overcomplicate the lending process? Rather than hiding behind them, it’s time to simplify and clarify what specialists buy to let entail, helping brokers better serve their landlord clients.
The demand for specialist buy to let products continues to rise, with landlords exploring new ways to optimise their portfolios through diverse property types and financing structures. As they refine their investment strategies by considering property choices, locations, and yield optimisation, amongst other factors, it has become increasingly apparent that they rely more than ever on advisers to navigate a dynamic and ever-evolving lending landscape.
Beyond the complexity of properties, borrower profiles add another layer of intricacy. Imperfect credit histories, multiple income streams, or the structuring of limited companies can make standard financing more challenging. This is where specialist lenders like Foundation Home Loans offer tailored products and manual underwriting to help brokers secure the right deals for their clients.
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However, by calling ourselves a specialist lender, we may sometimes contribute to the perception that buy to let lending is more complicated than it needs to be. That’s why our goal for 2025 is to provide greater transparency, break down outdated perceptions, and make it easier for brokers to confidently place specialist buy to let cases.
One key area of confusion we regularly encounter concerns property valuations for specialist buy to let properties. Many intermediaries request an investment valuation, assuming surveyors will use this approach. However, the valuation method depends on the location and type of property, and lenders cannot guarantee an investment-based valuation in every case.
A common misconception is that requesting a commercial valuation guarantees an investment-based valuation. Commercial surveyors apply similar principles to residential surveyors but with the potential to include investment figures where appropriate. The key takeaway? A commercial valuation doesn’t automatically mean a landlord will receive a yield-based or investment valuation.
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The valuation approach depends mainly on the location of standard HMOs or MUFBs (multi-unit freehold blocks). As alluded to previously but worth reiterating, areas with a high concentration of investment properties tend to support investment-based valuations. In contrast, secondary HMO areas outside major cities often default to comparable valuations. These are the most challenging locations to assess, making it essential for brokers to liaise with surveying firms before proceeding.
By demystifying valuation methods and how surveyors assess different property types, we hope to help brokers manage client expectations, structure deals effectively, secure the best solutions for their landlord clients, and embark on a more transparent and accessible specialist buy to let journey.
*This article was originally published on BTL Insider
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