Why a property could be under Let
There are various reasons why a property might be let for less than its market rent. Here are some of the common scenarios:
- Long-standing Tenant: You may have a tenant who has been with you for an extended period, and you wish to maintain that relationship by not increasing the rent.
- Lack of Market Awareness: Sometimes landlords aren’t fully aware that the rent they are charging is below market value.
- Market Dynamics: The property market can be volatile, and market rents can increase during the tenure of a lease.
It’s worth noting that not all lenders are keen on using market rent to calculate the loan amount. The primary concern for most lenders is risk, and they usually consider the actual rent to be a more accurate reflection of that risk.
However, there are lenders out there willing to base the mortgage amount on market rent, especially if there are strong indications that the property can command that rate.
Tips for a Fair Valuation
Raising a mortgage based on the market rent of an under-let property is possible but comes with its own set of challenges and considerations. As always, each situation is unique, so it’s crucial to seek advice from financial and property experts to ensure you’re making the best decision for your circumstances.