Property Finance Clinic


We miss speaking with our property investor clients face to face, and giving you the opportunity to ask any property finance questions that help you make decisions on your projects and portfolios.  For this reason, we’ve created the PROPERTY FINANCE CLINIC, giving you access to our property team and to those valuable conversations that you might otherwise have had at an EMPO event.

Property Finance Clinic 1
Property Finance Clinic 2

You can either complete the form above or contact us by email or phone and we will do our best to answer your question.

Sterling Commercial Finance is a trading name of Sterling Commercial Finance Limited and is a Broker not a Lender. Sterling Commercial Finance Limited is authorised and regulated by the Financial Conduct Authority

Previously Answered Questions

Lenders are asking for a COVID 19 Business Plan. What should this include?

These requests are common at the moment as Lenders need to understand how Landlords are managing their business.  The common items to include are include a profile of tenants (Student, Professional, Housing Benefit Claimants etc.), how voids and rent arrears are being managed and what cash resources are held to cover these.  We have put together a template from the best practices we have seen to assist our Clients and are happy to share this with you.

Please email us at and we will send you a copy.

Answered by Andrew Hunt

2. My Solicitor is too busy to deal with my BTL refinance deal. Can Lenders offer any alternative?

Yes.  Many Lenders have a panel of Solicitors that can act for both you and the Lender to reduce time and sometimes cost.  Discuss this with your Broker when applying for BTL Finance

Answered by Andrew Hunt

Is the BTL Mortgage Market back to normal following COVID 19 lockdown?

In the main, the answer is yes.  During lockdown we saw loan to values drop to 50% for some Lenders, amid economic uncertainty and no physical valuations.  Some Lenders relied on automated or ‘desk top valuations’ which are determined by data held, but these are and weren’t acceptable for the majority of transactions.  Some Lenders suspended lending altogether and withdrew their products from the market.

The good news is that, post lockdown, physical valuations are now possible again, including on HMOs. The majority of Lenders have seen their loan to values return to pre-lockdown levels, mainly 75%.

Demand for BLT properties remains strong and the reduction in stamp duty costs has assisted this.  As a result, rates have remained competitive, although many lenders have opted for 2 and 5 year fixed rate deals, rather than variable products.  The number of products for lending on HMOs has reduced, but they are still available.The main area of the market where there remains a degree of caution from Lenders, is in student lets, but we observe the market closely now that students have returned.

It’s important to remember that Lenders themselves had to find a new way of working during lockdown and many of their staff are still working from home.  Whilst this has led to slower processing times, most have adapted well.

Lenders are certainly asking more questions since lockdown and these include the addition of a COVID 19 business plans and whether repayment holidays or CBILS/bounce back loans were taken.  This is not necessarily a barrier to obtaining funding, but Lenders will want to ensure that the portfolio remains viable.

Answered by Andrew Hunt

Do I need to advise my Lender that I intend to let my property?

The simple answer is, yes.  If we assume that the property is your residential home and you have a residential mortgage, the majority of mortgage terms will require you to obtain a ‘consent to let’ before you can let it.

If you let without the consent of the Lender, you could be in breach of your mortgage terms and the worst case scenario is that the Lender could ask for their money back. At the very least, most Lenders may insist that you switch to a BTL mortgage.

You should take advice from your residential mortgage broker and Solicitor.

Answered by Andrew Hunt

What's happening with finance for short term refurbishment or development projects?

The short term finance market was affected in a similar way to Buy to lets in that physical valuations were halted during lockdown and we saw lenders tighten criteria or withdraw products altogether.

Now that physical valuations have resumed, they have largely returned to pre-lockdown levels.

There remains a real appetite in both the bridging and development market for both refurbishment and full development projects and a variety of products are available depending on the size of the project and the experience of the borrower.

We have also seen some Lenders bringing products to market that specifically assist with problems caused by the lockdown, for example, a ‘finish and exit’ product, designed to fund part completed schemes that have been delayed by COVID or by the existing funder.

Answered by Nic Rotton

How might my HMO be valued by a lender?

This is a question that we are asked on a regular basis and there is no simple answer.

The majority of HMO lenders will lend on the vacant possession value of the property (or bricks and mortar), despite the rental income received from letting to multiple tenants.

This is generally the case for smaller HMOs (up to 6 beds), although in reality, it is not determined by the number of rooms and I have also seen larger HMO’s valued in this way.

It’s often the case that, were the property to be put on the market, it may still be purchased as a private dwelling. It’s also likely that a property investor looking to purchase a property to let as an HMO, could find a neighbouring property for sale at a lower price, refurbish at a low cost and convert to an HMO without paying a premium to purchase a ready made HMO.  In this case, it makes sense for the lender to lend on the bricks and mortar value that is achievable in the market.

There are lenders in the market that will lend on a commercial valuation.  The valuer will consider the market value, taking into account rent and yield. Whilst the valuer will apply the gross rent, they will then make deductions for repairs, voids and maintenance and make comparisons with other properties in the area.  This results in a ‘premium’ being applied to the value of the property, rather than a traditional ‘yield’ valuation, but does allow for increased borrowing against a higher value.

In my experience, a commercial valuation is appropriate where the fabric of the building has been materially altered and the property cannot easily be returned to a private dwelling.  We see this regularly on larger scale commercial to residential conversions, where each room may have an ensuite and there may even be multiple kitchens etc.

Another more obvious example of where a commercial valuation might be appropriate, is where the property has C4 planning, as there is an Article 4 directive in place. The Article 4 dictates that an investor looking to purchase cannot readily purchase a property with C3 use and convert it to an HMO, resulting in a ‘premium’ price for the property that already has the C4 use.

The same applies for properties where planning is in place for Sui generis use as an HMO.  Sui genesis is a term used when a building does not fall within any particular use class. This is likely to be a yield based valuation, based on sustainable rent comparisons.

In summary, it can be difficult to determine how a lender might value your HMO as much depends on the lenders own policy and on the method that the valuer deems appropriate; unfortunately the valuation process is not a science.  It’s also worth remembering that the valuation method used for valuing HMOs (especially for purchases) can protect you as much as the lender, ensuring that you get your numbers right from the get go!

Answered by Sarah Woolf