Could a genuine property bargain fund most of its own deposit?

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Could a genuine property bargain fund most of its own deposit?

A new bridging product from MS Lending Group caught my attention because it tackles a problem many experienced property investors will recognise. You can negotiate a genuine bargain, create equity before completion and still find that the finance calculation leaves a substantial amount of your cash tied up in the purchase. MS Lending Group’s below-market-value bridge is intended to recognise that discount, offering up to 90% of the purchase price on qualifying residential deals and up to 80% on commercial and semi-commercial acquisitions.

That headline will naturally attract attention, but it needs unpacking. This is not a 90% loan-to-value bridge. On residential property, the maximum loan is the lower of 90% of the purchase price or 70% of the lender-accepted market value. On commercial property, it is the lower of 80% of the purchase price or 60% of the valuer’s 180-day value. There are therefore two locks on the facility, and that distinction is what allows the lender to release a high percentage of the price without lending at 90% of the property’s underlying value.

What would this mean on a £500,000 purchase?

MS Lending Group’s residential example uses a property bought for £500,000 with an accepted market value of £650,000. Ninety per cent of the purchase price is £450,000, while 70% of the market value is £455,000. The lower figure applies, producing a maximum gross advance of £450,000 and leaving £50,000 to be contributed towards the price, before property tax, interest and other transaction costs.

There is some useful mathematics behind that example. To receive the full 90% of the residential purchase price, the price must be no more than 77.78% of the accepted market value. Put another way, the investor must have secured a genuine discount of at least 22.22%. A smaller discount may still fit the product, but the 70% valuation cap will reduce the percentage of the price that can be borrowed.

For example, if the same £500,000 purchase were valued at £600,000, the 70% cap would limit the gross loan to £420,000 and the buyer would need £80,000 towards the price. If the valuation were £550,000, the maximum would fall to £385,000 and the price contribution would rise to £115,000. A £100,000 difference in the valuation has therefore changed the buyer’s contribution by £65,000. That is why the words “up to” matter just as much as the headline 90%.

The commercial version

The commercial BMV bridge works on the same principle, although the figures are lower and the valuation basis is more conservative. The maximum is the lower of 80% of the purchase price or 60% of the 180-day value. A 180-day value is the valuer’s estimate of what the property should achieve with a restricted six-month marketing period, rather than an open-ended sale.

The full 80% of the purchase price is available only when the price is no more than 75% of that 180-day value, equivalent to a discount of at least 25%. In the lender’s worked example, a commercial property has a 180-day value of £1 million and is being bought for £750,000. Both calculations produce a maximum gross loan of £600,000, leaving the investor to contribute £150,000 towards the price before all other costs.

This version could be relevant to investors buying offices, retail units, industrial property, warehouses and mixed-use assets, including purchases from receivers, existing landlords or other vendors who value speed and certainty. MS Lending Group says desktop valuations can be used on commercial gross loans up to £500,000. On residential cases it says AVMs may be used on gross loans up to £150,000 and desktop valuations on loans up to £750,000, which could help where time is critical, although every case remains subject to underwriting.

Where could it be useful?

The most obvious candidates are direct-to-vendor and off-market purchases, probate or part-exchange transactions, portfolio acquisitions and deals involving a motivated seller who is prepared to trade some price for a reliable completion. It could also preserve capital for refurbishment or another acquisition, although investors should not assume that the facility itself includes a separate works tranche unless that is confirmed in the offer.

A published MS Lending Group case study illustrates the underlying idea. An experienced investor agreed to buy a three-bedroom semi-detached property in London directly from the vendor for £400,000. An automated valuation supported a value of £520,000 and the lender advanced £340,000, equal to 85% of the price and approximately 65.4% of the value. The property required no refurbishment and the stated exit was an onward sale within a 12-month term.

The product is therefore not manufacturing equity. It is allowing an investor to use some of the equity created by a well-negotiated purchase instead of finding the whole of a conventional deposit in cash.

“Below market value” must withstand scrutiny

An asking price is not a valuation, and neither is an investor’s opinion of what a property ought to be worth. RICS defines market value by reference to an arm’s-length transaction after proper marketing between willing, knowledgeable and prudent parties. A lender will therefore want evidence explaining both the supported value and how the discount arose.

That distinction matters because some apparent bargains are discounted for a reason. Vacancy, condition, a short lease, title or planning problems, tenant risk and restricted demand can all reduce value or complicate the exit. The question is not how much less the buyer is paying than an estate agent’s asking price. It is whether the lender’s valuation supports a genuine discount after the relevant risks have been considered.

A 10% contribution is not the total cash requirement

The £50,000 in the residential example is the contribution towards the purchase price, not necessarily all the cash required to complete. The buyer may also need to fund SDLT, LBTT or LTT, their own legal costs, valuation and broker charges, any lender fees, retained or rolled-up interest and the cost of works. Those amounts can be material, particularly on a high-leverage, short-term facility.

At the time of writing, the public BMV product pages do not set out a monthly interest rate or a product-specific schedule of arrangement fees, exit charges or minimum interest. That is not unusual for case-by-case bridging, but it means the headline percentage should never be used as a proxy for the cash arriving at the solicitor’s client account. Before committing to a purchase, I would want a written illustration showing the gross facility, net advance, every deduction, the amount required from the buyer, the projected redemption balance and what happens if the loan runs longer than planned.

Plan the exit before exchanging contracts

High leverage makes the exit more important, not less. If the plan is to refinance onto a buy-to-let mortgage, the investor should establish before exchange how the intended term lender will treat a recent below-market-value purchase. Criteria vary. Virgin Money, for example, currently permits a remortgage within six months but normally calculates the loan using the lower of the original purchase price and current valuation unless significant improvements have increased the value. A bridge valuation of £650,000 does not therefore guarantee that a term lender will immediately lend against £650,000.

The refinance should be tested against the original price, a lower valuation, a higher interest rate and a delayed completion. A credible second exit is also valuable. MS Lending Group’s own guidance notes that sales can be delayed or down-valued, while refinance criteria and affordability can change during the bridge term. A bridge should solve a temporary timing problem, not create a permanent funding problem.

Who is behind the product?

MS Lending Group was launched in 2021. In July 2026, Pollen Street Capital announced an increase in its funding line to £230 million and said the lender had advanced more than £600 million since launch. The BMV product is available to residential investors buying as individuals, sole traders, limited companies or SPVs, while the commercial version is available to sole traders, companies and SPVs, subject in every case to the lender’s valuation and underwriting.

My view

This is an interesting product because it rewards the part of a transaction in which a good investor should have an advantage: finding and negotiating a genuine bargain. It could reduce the cash trapped in a purchase and allow an investor to deploy capital elsewhere. However, it is not a substitute for due diligence, a cash buffer or a properly evidenced exit.

The strongest case will be one where the discount is real, the valuation is robust, all costs have been allowed for and the exit still works if the term lender takes a more conservative view. Used in that way, the product could turn pre-existing equity in a bargain into useful purchasing power. Used simply to stretch leverage on a marginal deal, it could make an expensive mistake more expensive.

Investors and brokers can review the residential and commercial criteria or contact MS Lending Group at enquiries@mslendinggroup.co.uk or 0161 823 7993. I would also be interested to hear from Property118 readers who have used this type of funding and can share what happened at valuation and refinance.

This article is for general information, not financial advice or a recommendation to borrow. MS Lending Group states that its bridging finance on commercial and investment property is not regulated by the Financial Conduct Authority. Terms are subject to valuation, underwriting and the security offered. Property may be at risk if a secured loan is not repaid.

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Just as landlords predicted – rents are going up

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Property118

Just as landlords predicted – rents are going up

You must hand it to Labour, though they went hard on how great the Renters’ Rights Act would be for tenants, at least they didn’t promise that rents wouldn’t go up.

Well, here we are, 100 days into the one-sided debacle of the legislation and guess what? Rent trackers are pointing out the obvious.

Rents are not only going up, but landlords are pitching new and renewed rents at growing market rates.

But the market rates are set by other landlords who also can’t accept higher offers, so they are setting theirs higher too.

Then you must set your rents, and the agent says you must do so at market rates, which are going up and the circle of inevitable rises continues.

London rents go up

Propertymark’s latest tracker shows London rents rising from £2,385 to £2,484 in a single month, a 4.2% jump.

The salary needed to secure the average London home has climbed from £70,050 to £74,520 in a year.

That is down to demand for privately rented homes continuing to significantly outstrip supply.

And until more good quality homes are brought into the sector, tenants are unlikely to see the reductions many are hoping for.

Bidding war ban

Meanwhile, one letting agency has flagged up a trend that anyone who has ever negotiated a price rise could have called from the moment the bidding war ban was drafted.

Barred from letting tenants compete openly for a property, landlords are simply setting the advertised rent higher on the assumption tenants will then offer less but still land somewhere near what the landlord wanted all along.

Rightmove’s rent tracker reflects a wider trend: asking rents rose 2.9% year-on-year in the second quarter, the fastest pace in two years, with London outperforming the rest of Britain for the first time since 2023.

None of this should surprise anyone. What continues to baffle me is that it does.

Why invest in London?

Why does everybody act astonished that London rents sit above the national average, when London property prices and values have always sat miles above the national average?

Nobody clutches their pearls that a flat in Chelsea costs more than a semi in Chesterfield.

Yet the same people who accept that logic for house prices somehow expect rents, the return on that capital, to defy it.

Rent is the price of housing capital.

If the capital is expensive, the rent is expensive. That is not exploitation, it’s simple maths.

London yields count

What should genuinely raise eyebrows is that anybody still bothers letting property in the capital at all.

Gross yields on London buy to lets can be as low as 3% to 4%. That is before mortgage interest, maintenance, management, insurance, tax, licensing, voids and compliance.

On a leveraged property, the rent can struggle to cover the finance and operating costs, while alternative investments offer returns without boilers, licensing schemes or possession proceedings.

Add Section 24’s mortgage interest restriction, licensing fees, EPC upgrade costs running into 2030, and the compliance burden the Renters’ Rights Act has piled on top, and the wonder is not that rents are rising.

The wonder is that London landlords haven’t all sold up and put the money somewhere it might actually work for them.

Benefit tenant issues

Then there is the risk nobody in Westminster wants to discuss honestly: housing benefit tenants.

Take one on, and if it later transpires they were never eligible for that benefit, the council won’t be chasing the tenant for the money. It chases the landlord.

You can carry out every reference check available, and you still cannot eliminate that risk, only reduce it, and reducing it means more due diligence, more admin, more cost, all before you have let a single room.

Small wonder so many landlords now think twice before touching a benefits tenancy at all, whatever the consequences for the people who need housing most.

Balance rent income

This is the trouble with legislation dreamed up by people who have never had to balance a rent income against a mortgage statement.

Ban bidding wars and landlords price in the uncertainty upfront.

Load landlords with risk and cost and some will simply leave the market, tightening supply further and pushing rents higher still.

The Renters’ Rights Act was sold as tenant protection.

What it actually protects is the political fantasy that you can regulate costs out of a scarce, expensive asset without either tenants or landlords paying for it somewhere down the line.

Rent is not the problem. It is the symptom.

Treat it as anything else and the same story will keep surprising ministers, month after month, tracker after tracker.

Unfortunately, it is tenants who must live with the consequences. Every extra cost created by government or councils must eventually be absorbed through higher rents, reduced investment or fewer homes.

One way or another, tenants pay the price. They have little choice but to do so.

Until next time,

The Landlord Crusader

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Buy to let mortgage possessions fall

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Buy to let mortgage possessions fall

The number of buy to let mortgages in arrears and properties taken into possession fell during the second quarter.

Data from UK Finance shows 8,390 loans with arrears of at least 2.5% of the outstanding balance, 6% fewer than in the previous three months.

These cases represented 0.44% of all BTL mortgages, while the lightest arrears category dropped 7% to 2,980.

Lenders took possession of 630 buy to let properties, down 22% from the first quarter and 20% year on year.

BTL mortgage pressures remain

Ian Harris, the NAEA Propertymark president, said: “Whilst these figures are encouraging, it is important not to lose sight of the financial pressures that continue to affect homeowners and landlords.

“The reduction in mortgage arrears and repossessions is welcome, but affordability remains a challenge for many across the housing market.”

UK Finance’s head of analytics, James Tatch, said: “The number of mortgages in arrears are falling for both residential and buy to let mortgages – and possessions are also down year-on-year for the first time since late 2023, and remain significantly below the long-term historic average.”

Landlord claims increase

Meanwhile, the Ministry of Justice says landlords made 23,635 possession claims in England and Wales, 6% more than a year earlier.

Those cases concern landlords seeking possession from tenants, rather than lenders taking control of mortgaged buy to let properties.

Accelerated claims rose 16% and private landlord cases increased 5%, while social landlord proceedings fell 3%.

Warrants dropped 6% to 9,715 and repossessions carried out by county court bailiffs declined 3% to 6,560.

Possession figures differ

The Ministry recorded 1,008 mortgage repossessions by county court bailiffs, 14% fewer than in the second quarter of 2025.

Its data cover court actions in England and Wales, while UK Finance collects UK-wide lender figures that include properties surrendered voluntarily.

UK Finance reported 1,150 homeowner properties and 630 buy to let homes taken into possession, whereas the Ministry does not separate its mortgage total by loan type.

More than two-thirds of the possessions recorded by UK Finance related to mortgages arranged at least a decade ago.

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