Underwriting standards
Every property is an underwriting exercise, not a sales story.
These are the minimum internal thresholds a purchase must clear before we proceed. They protect the downside first; returns are discussed only once the downside is understood.
| Measure | Threshold | Why it matters |
|---|
| Gross rental yield | ≥ 6.5% | An initial income screen, applied before financing, operating costs and vacancy assumptions. |
| Stressed debt-service cover | ≥ 1.35× | Rent must cover interest with a margin, tested at a higher rate than today's. |
| Stabilised loan-to-value | ≤ 65% | Leaves genuine equity in every asset and room to refinance without pressure. |
| Cash reserve | 6 months | Stressed debt service and essential operating costs held in readily available liquidity. |
| Vacancy and credit loss | 5–8% | Assumed in every appraisal; 8% in the stress case. |
| Stressed project margin — resale | ≥ 20% | Of total project cost, after a 10% reduction in exit value, a 15% refurbishment cost overrun and a three-month delay. |
| All-in cost — retain / BRR | ≤ 80% | Of stabilised value, ensuring refurbishment creates meaningful equity before refinancing and protecting against valuation or cost pressure. |
Gross rental yield≥ 6.5%An initial income screen, applied before financing, operating costs and vacancy assumptions.
Stressed debt-service cover≥ 1.35×Rent must cover interest with a margin, tested at a higher rate than today's.
Stabilised loan-to-value≤ 65%Leaves genuine equity in every asset and room to refinance without pressure.
Cash reserve6 monthsStressed debt service and essential operating costs held in readily available liquidity.
Vacancy and credit loss5–8%Assumed in every appraisal; 8% in the stress case.
Stressed project margin — resale≥ 20%Of total project cost, after a 10% reduction in exit value, a 15% refurbishment cost overrun and a three-month delay.
All-in cost — retain / BRR≤ 80%Of stabilised value, ensuring refurbishment creates meaningful equity before refinancing and protecting against valuation or cost pressure.
These figures are our own internal decision hurdles. They are not forecasts, projections or promises of any return, and they may change as market conditions change.
HMO acquisitions are underwritten against the same yield, cover and reserve thresholds above, calculated on room-by-room income, and additionally require confirmed mandatory or additional licensing, Article 4 / planning status and fire-safety compliance before exchange.