As a landlord or property investor, understanding the difference between market rent and rent achieved isn’t just a technicality—it could be the key to unlocking better borrowing potential on your next Buy-to-Let (BTL) mortgage.
Whether you're expanding your portfolio or refinancing an existing property, this distinction plays a crucial role in how lenders assess affordability. And with BTL mortgage criteria varying widely across the market, knowing which figure applies—and how to navigate it—can make all the difference.
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What’s the difference between market rent and rent achieved?
Rent achieved is the actual amount your tenant is currently paying.
Market rent is the estimated rental value your property could command today, based on comparable properties in the area.
While market rent and rent achieved may sound similar, they can differ significantly depending on the property's rental history and local market conditions. For instance, if a landlord hasn’t reviewed or increased the rent in several years, the rent achieved may be considerably lower than what the property could command today. Similarly, if a tenant moved in during a rent spike—such as in 2022—the rent achieved might be unusually high and not reflective of current market trends. Additionally, shifts in the local rental market, whether cooling or surging, can further widen the gap between these two figures. As an example, a landlord who hasn’t changed the rent in 15 years may be charging £950/month, while similar properties now rent for £1,400/month. That’s a £450/month gap—potentially limiting how much you can borrow.
Why it matters for Buy-to-Let borrowing
When applying for a Buy-to-Let mortgage, lenders assess rental income to determine how much they’re willing to lend—but not all lenders use the same figure. Some base affordability on market rent, particularly if the property is vacant or has recently been let. Others rely on rent achieved, which can restrict borrowing if the current rent is outdated or below market value.
In cases where rent achieved is unusually high due to a short-term market spike, it may not reflect current conditions, creating another potential hurdle. That’s why understanding which figure a lender uses is essential—it directly affects your borrowing power, the mortgage products available to you, and whether your application is likely to be approved.
Why work with a mortgage adviser
This is where working with a mortgage expert can give you a real edge.
• We know which lenders use market rent vs rent achieved.
• We understand how to position your application to maximise borrowing potential.
• We have strong relationships with lenders, giving us access to more flexible criteria and tailored solutions.
Whether you're a seasoned landlord or just starting out, our expertise ensures you're matched with the right lender, using the right rental figure. In today’s evolving rental market, understanding the nuances between market rent and rent achieved is more than just good practice—it’s a strategic advantage. If you're considering a BTL mortgage, refinancing, or expanding your portfolio, we’ll help you navigate the complexities, unlock better borrowing potential, and make smarter investment decisions.
Ready to talk?
Contact us today to speak with a Buy-to-Let mortgage expert on 08000 38 37 36 or book an appointment.
