Podcast Summary
Using rental return as a benchmark for HMO property valuation: Research average rental yield for similar HMOs, calculate property value based on percentage, gather info from local agents, other HMO owners, and management agents.
Determining the market value of a property, especially a Multi-Let (HMO) in areas with few comparable properties, can be challenging. However, Rob from Ask Rob and Rob suggests using the rental return as a benchmark. By researching the average rental yield for similar HMOs in the area and calculating the property value based on that percentage, you can estimate the market value. It's essential to gather information from local agents, other HMO owners, and management agents to help determine accurate rental yields and valuations. Keep in mind that when selling the property, it will still be measured using the same method.
Valuing large properties in small neighborhoods: When valuing a large property in a small neighborhood, look at the most expensive smaller homes and give it a marginal price lift. Consult local real estate experts for accurate valuations.
When valuing an unusually large property in a neighborhood filled with smaller homes, it's unlikely to command a significantly higher price due to the area's ceiling price. A rough guide to valuing such a property is to look at the most expensive smaller homes in the area and give the larger property a marginal lift beyond that price. However, it's essential to consult local real estate experts for accurate valuations, as they can provide a range of prices based on their local expertise. This approach will help you get close to an accurate valuation for your unique property.
Understanding the impact of tenancy agreements on mortgage lending: Ensure you have an Assured Shorthold Tenancy (AST) agreement for buy-to-let properties to meet mortgage lender requirements, as most do not accept other types of tenancy agreements.
It is important to understand the type of tenancy agreement you have and its implications when dealing with mortgage lenders. Tom's situation involved a company let agreement for his rental property, which he thought was beneficial due to the assured rent and maintenance agreement. However, when he tried to remortgage, he encountered issues due to most lenders requiring an Assured Shorthold Tenancy (AST) agreement. This is because ASTs offer lenders the legal right to regain possession of the property if necessary. Tom now faces a dilemma as he has another year and two months left on his company let agreement and wants to remortgage his variable rate mortgage. Unfortunately, Tom should not have entered into this type of agreement in the first place as most buy-to-let lenders do not permit tenancy agreements other than ASTs. If you're in a similar situation, it's essential to consult with a legal or financial expert to ensure you're meeting the requirements of your mortgage lender and adhering to the rules of your tenancy agreement.
Landlords may limit long-term Assignable Subleases due to quick possession needs: Landlords can communicate with tenants or search for lenders to allow long-term Assignable Subleases
Landlords may not allow Assignable Subleases (ASTs) that last more than a year due to their desire for clear frameworks and quick possession when needed to recoup their money. This can be frustrating for landlords with reliable, long-term tenants. However, there are options. Landlords can communicate with the organization renting their property and attempt to find a solution. Alternatively, they can search for lenders who permit this type of arrangement. This process may require the assistance of a mortgage broker and persistence in finding the right lender. While it may not be an easy process, it is not impossible.
Communicating with rental companies and consulting a mortgage broker can help landlords rent properties without a mortgage.: Landlords facing issues with renting out properties without a mortgage should communicate with their rental companies and consult a mortgage broker specializing in buy-to-let properties for potential solutions.
If you're a landlord facing issues with renting out properties without a mortgage, you're not alone. Many other landlords are in the same boat, and some may even be doing it unknowingly. However, this issue can be resolved. The first step is to communicate with the company you're renting to. The second step is to consult a specialist mortgage broker who deals exclusively in buy-to-let properties. With their help, you're likely to find a solution. So, don't worry, John. Your situation is manageable. And to everyone listening, remember that every question brings us one step closer to finding answers. Keep asking, keep learning. That's all for today's Ask Rob and Rob. We'll be back on Thursday with the property podcast, and we'll see you next week with more questions and answers. Until then, take care and have a great day!
