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Build to Rent mortgages
Build to rent finance funds purpose-built rental housing held by a professional landlord, usually a block or scheme let to individual tenants. Lenders underwrite the scheme, the operator and the rental income, rather than treating it as a standard buy-to-let.
Reviewed by David Sampson, Founder & Director
What is a build to rent mortgage?
Build to rent finance funds purpose-built rental housing held by a professional landlord. Lenders assess the scheme, the operator and the rental income. It is separate from a standard buy-to-let mortgage on a single property.
How does a build to rent mortgage work?
1
Scheme review
1-2 weeksA broker reviews the site, planning, costs, rent appraisal and borrower experience.
2
Lender terms
1-2 weeksA specialist lender indicates loan size, term and the main conditions.
3
Due diligence
2-4 weeksValuation, cost appraisal, legal checks and rental evidence are completed.
4
Facility
1-2 weeksThe facility letter is agreed and legal documents are prepared.
5
Drawdown or completion
Deal-specificFunds are released at completion, or in stages if the loan covers the build.
What do lenders look for on build to rent mortgages?
Borrower profile
- Experience of development, investment or professional lettings
- A company or professional structure is usual
- Working capital for cost overruns, voids and interest
- A clear exit: refinance, sale or long-term hold
- Understanding of build-to-rent management and amenities
Property requirements
- Purpose-built or purpose-designed rental housing
- Planning that allows the proposed rental use
- A lettable specification and a realistic rental appraisal
- Location with evidenced rental demand
- Professional management or a credible operator plan
What fees come with a build to rent mortgage?
Arrangement fee
Lender facility fee
Typically 1% - 2%
of the facility
Valuation and monitoring
Value, cost and build inspections
Deal-specific
higher on a development facility
Legal fees
Facility documents and security
Deal-specific
usually paid by the borrower
Broker fee
Arrangement of the facility
Agreed in advance
often a percentage on completion
Fees vary by lender. Advisers provide a breakdown before you proceed. Mortgage118 does not quote fees.
Resources
- FCA Register — Check a firm is authorised
- MoneyHelper — Free, impartial mortgage help
FAQs
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