I can’t believe Friday has come around again so quickly. I have written this blog is to keep everyone safe AND try and to curb costly reinspection fees for us all.
So this week we have seen some more restrictions in place, and a more severe lockdown looking likely. With this in mind I wanted to talk about valuations; and how we can keep them as smooth as possible over the next few months – as it’s not looking likely that it will be getting better soon!
Prevention is better than cure… so the easiest way to manage valuations at the moment is to try and arrange them for when the property is vacant.
This should be easier (unless you are buying with tenants in situ). It’s really important to speak to your agent and find out if anyone is living there before you view the property anyway and this may affect your buying decision. Get them to confirm that there are no vulnerable tenants or those with COVID/self-isolating. They should also have their COVID procedures to protect all involved.
The difficulty is that you are paying for the valuation, in a sellers market, but have no control over the visit. Any ‘muck’ ups are at your expense.
There’s a common misconception that you need to have your property tenanted to get the best valuation figure; This just isn’t true for a number of reasons:
- The surveyor will use market rent rather than the rent you are receiving for the property. Their argument is that charging above market rent is not sustainable, particularly if you have a newly renovated property.
- The rental may not even matter to your project anyway. If it has a high yield, then it’s less likely to affect your max borrowing, therefore not something to be concerned with. The only time it may affect the valuation is if the surveyor feels that the property has not got sufficient demand – having a clear interest in the property and Spare Room information can counter act this. Try and get ASTs signed/deposits paid without the tenants living there if you time it right.
- Where you are looking for a commercial valuation on a large (7 bedroom or more) HMO it’s slightly different. The surveyor will still use the market rent though, so having some ASTs signed and deposits paid may help, but we see market rent used rather than passing rent in most of these scenarios.
The advantages of valuing a vacant property
I talk about this with lots of my clients, as an alternative viewpoint
- Your property looks beautiful!
- You may have decided to pay for some professional photos to be carried out for marketing and your portfolio, so arranging the survey visit at this time means they get the same view. (keep appointments separate!)
- It’s the best your property will look, when tenants move in it will never be quite as clean and tidy so take advantage of it!
- This will help you demonstrate and back up your value figure and rent estimates.
- It creates a much better impression for tenants. You’re not asking them to leave for a valuation shortly after they move in
- You haven’t got the extra admin of arranging a time that they can all be out the house, or the worry of finding out about someone self isolating the day before the appointment!
What if your property can’t be vacant?
There will be instances where having a vacant property isn’t possible. We had a case last week where the client is buying a tenanted property and will serve notice once it has exchanged. This property has highlighted that you need to be extra cautious when arranging a valuation.
The surveyor obtained keys from the agent, the tenants were given 48 hours notice and advised to be out of the property for the appointment. The valuer found a tenant who was showing COVID symptoms and self isolating in his bedroom! The surveyor was understandably furious with the situation. Thankfully we worked with the lender on what had been inspected – thus narrowly avoiding an additional £900 charge to revisit the property and complete the survey.
So my top tips in this scenario would be:
- don’t assume that your agent is doing anything! You need to check that all tenants are aware of the appointment and have confirmed that they will be out – preferably 48 hours before, in case you need to move the appointment.
- Ideally you can meet the valuer at the property to ensure that it is vacant
- If that isn’t possible then ask for the agent to meet the valuer, so they can check the property before anyone enters. These rules may now change due to the additional restrictions in parts of the country, but it’s worth asking.
- Ensure that your tenants are clear on their responsibility to their housemates as well as their landlord if they are showing symptoms and/or have to self isolate.
I hope this helps, if you’ve got any other questions then please give me a call. Have a good weekend everyone!