Buy-to-let investment
Buying a rental property: building a file the bank can read
A rental property is financed through a mortgage and assessed as an asset: tenancy status, technical condition, cash flow. The documents that decide.
A rental property is financed through a standard mortgage, in your own name or through a family civil company, but the bank assesses it as an asset. The file is won on three proofs: a tenancy status cross-checked with leases and receipts, a quantified technical condition that the buyer documents themselves in the absence of a building manager, and a cash flow that remains after the purchase.
By Sandy MASCART, mandataire d'intermédiaire en opérations de banque et en services de paiement ORIAS 26000541 sous le mandat de CDV PATRIMOINE & ASSURANCE (ORIAS 14005573)
Key points
- A rental property is financed through a standard mortgage, but assessed as an asset: proven rents, technical condition, cash flow.
- Each unit is judged on proof: without a written lease or receipts, it counts as vacant, whatever the rent displayed in the property listing.
- In sole ownership, no building manager documents the structure: property surveys, quotes and inspection of common areas are to be provided by the buyer.
- The cash flow after the purchase counts as much as the down payment: a roof or a boiler fails without notice, and no one shares the bill.
- Beyond a certain amount or number of units, the file goes to a specialised service that expects a professional setup.
An investment property is financed through a standard residential mortgage, but the lender assesses it as an asset. Strengthen your application with proven rental income, a quantified technical condition report, and liquidity after the purchase. A guide to the application process for rental investment.
Can an individual finance an entire building?
Yes, either in your personal name or through a family civil partnership. The debt-to-income ratio standard applies as it does for any rental purchase. Above a certain amount, the application is often referred to a specialised department, which expects a professional-grade dossier.
Le plafond vaut pour un immeuble de rapport acheté par un particulier. La rentabilité affichée par le vendeur n'entre pas dans ce calcul : seuls comptent les loyers retenus par la banque, face à l'ensemble de vos charges de crédit.
- En vigueur depuis le
- Source
- Décision D-HCSF-2021-7, art. 1er — Légifrance
Rental income assessed unit by unit, based on evidence
Cross-check the seller’s rental status report, unit by unit, against leases and rent receipts.
- Occupied unit, lease and receipts: the actual rent is retained, weighted accordingly.
- Vacant unit: zero, or a prudent estimate with justification.
- No written lease, or rented to a relative of the seller: treated as vacant.
- Commercial premises: commercial lease, the tenant’s financial stability, and vacancy rates are sometimes severely weighted.
See rental income and, for local regulations, rental property in Lyon.
The technical file: you must assemble it
Without a building manager, you must document the structure yourself.
| Document | What it establishes |
|---|---|
| Tenancy inventory, leases, receipts | What the property generates in income, unit by unit |
| Business rates, contracts (insurance, maintenance, water) | The charges that are solely your responsibility |
| Property surveys for each dwelling | The units that can be let without works |
| Condition of the shell and roof: roof, façade, utilities | The major works over the next ten years |
| Quote or cost estimate from a project manager | The works budget to be financed |
| Title deed, descriptive statement | The basis for the security |
Please submit the EPC for each dwelling; otherwise, the bank will assume the worst. Poorly rated units can be financed with their quantified works (F or G rated properties, works included in the loan).
Post-purchase liquidity, as important as the down payment
Here, you pay for the roof and boiler without notice. For a building, most banks expect a down payment that exceeds the fees. It is better to provide a slightly smaller down payment and retain sufficient funds to absorb vacancy and major repairs.
Security, term, valuation
- Security: the guarantee quickly reaches its limits; a mortgage is common (the securities).
- Term: capped.
Certains établissements appliquent d'eux-mêmes une durée plus courte aux immeubles de rapport, notamment quand le bâti est ancien ou que les travaux sont lourds. C'est une politique interne, qui se vérifie avant le dépôt.
- En vigueur depuis le
- Source
- Décision D-HCSF-2021-7, art. 1er — Légifrance
- Valuation: the valuer also assesses value based on rents; a value below the price reduces the loan (the valuation).
Individual name or company: decide before the preliminary sale agreement
Changing the purchaser during the process requires the application to be re-examined. In the case of a company, the lender reviews the partners and often requires their guarantee (the SCI).
Around Lyon: where to look
Preferably Villeurbanne, eastern Lyon, Givors, Vienne, Villefranche-sur-Saône, Tarare or Saint-Étienne. Is the stated yield high? Prove the market: dated property listings, certification from a property manager.
Before the loan offer: a professional file
- Only proven rents in the calculation.
- The complete budget: price, fees, immediate and five-year works, remaining cash.
- The debt-to-income ratio with your current loans.
- The technical file.
- The right counter: the banks that process this type of property.
I am a mortgage intermediary working under mandate; the lender decides (fees, documents to gather). Is the price still negotiable? Have the tenancy status read out by telephone.
Create your file: I forward it to the appropriate department.
Sources
Read next
- How much can I borrow? Mortgage capacity in Lyon
- Buying an occupied property: financing a home sold with its tenant A let property is purchased with its tenancy: the rent the lender retains, the documents to require from the seller, and the timeline if you wish to occupy it.
- Financing a rental investment in Lyon: what the bank actually looks at Financing a rental investment in Lyon: the rent the bank takes into account, the expected down payment, the mode of operation and the structure that holds up.
- Financing a purchase through an SCI, under IR or IS: what the bank truly requires Mortgage through an SCI: partners’ joint guarantee, debt-to-income ratio, current-account contribution, security. What secures the deal, under IR or IS.
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