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Mortgage products that integrate automated valuation models (AVMs) can offer significant cost and time savings. But until recently they have not been readily available in the buy-to-let arena.


While the valuation method may not suit all properties, it does present advantages for lenders, brokers and their portfolio buy-to-let landlord clients.

In fact, AVMs can really come into their own when assessing a portfolio. This is because they offer real economies of scale. A good example of this is where a landlord wishes to remortgage a portfolio of properties.

Normally, the landlord will apply to have these revalued at the same time which involves a physical valuation of every single property in the portfolio. This traditional valuation process can take an inordinate amount of time, requiring the landlord to be physically present at each property and to coordinate with the tenant. In addition, with a fee for each property, the valuation costs can be substantial.

Last month (January), Landbay became the first dedicated buy-to-let lender to integrate AVMs to significantly speed up offer times. Before our whole of market launch, we ran an extensive pilot which found that using an AVM helps applicants save on average £500 because they do not have to pay valuation fees. One client in particular saved nearly £4,000 in fees on their portfolio. For a portfolio of 20 properties, this would represent a total saving of £10,000 on valuation fees alone.

Our pilot also found that AVMs speed up the time to offer and are on average three times faster than a standard application. During the pilot, we were able to issue an offer within 24 hours from the decision in principle.  In the case of the client who saved nearly £4000 in fees, their portfolio reached the offer stage within 14 working days.

Where AVMs are less suitable is where a portfolio includes atypical properties. Finding a comparable for something more bespoke or anything out of the ordinary can be harder to come by. For example, it is harder for AVMs to be accurate for a large, detached house, a period property near a floodplain or a multi-unit freehold block.

For this reason, AVMs are typically available for standard properties only, and in our case, on our range of five-year fixed-rate products, with a maximum property value of £750,000 at 70% loan-to-value (LTV).

AVMs also do not function well when there is a gap in valuation data. This can be particularly challenging for portfolio valuations. During the pandemic, many lenders turned to AVMs simply because they were unable to carry out physical valuations during lockdowns. But gaps in data meant AVMs were trying to calculate a valuation based on historical data. This could not be used to provide accurate outputs with regards to current market conditions.

But since then AVM technology has evolved rapidly, both in terms of speed and in prevalence of more sophisticated and reliable data sets. AVMs can now draw upon data such as the number of bedrooms in a property and whether it has more than one kitchen.

There will always be a place for physical or drive-by valuations. But where and when the circumstances are right, AVMs offer the ease, certainty, cost savings and speed to help brokers support landlord in expanding or remortgaging their portfolio. Our extensive pilot ahead of the whole of market launch generated tremendous results, giving us the confidence that our AVM provides significant benefits to borrowers, including portfolio landlords. We are working with our broker partners to support landlord clients nationwide.

There’s no doubt that in the current market, timing can make or break a deal. Brokers have to act quickly to support their landlord clients. To keep up with brokers, lenders need the agility that AVMs provide.

Rob Stanton is sales and distribution director at Landbay

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