When it comes to conveyancing for landlords and investors, the purchasing process itself doesn’t differ that much from residential conveyancing, there are just additional things to bear in mind.
If possible, try and buy a freehold property rather than a leasehold. This means that you will own the land the property is built on, and it is less likely to have restrictions placed on it. If you do purchase a leasehold property, ensure you understand all relevant covenants obtained from landlords and management companies.
Whether you’re a first-time investor or are purchasing additional property, there are a number of things to consider when purchasing a property for letting purposes, which we have outlined.”
Have a good idea of budgets and costs
If you are considering buying a property for rental purposes, you will likely need a larger deposit to get a buy-to-let mortgage. Dependent on the mortgage lender, you will need at least 20% of the property value.
There will be a number of initial fees such as the valuation fee and the surveyors fee, as well as the additional parties to pay such as the lender/broker fees and the conveyancer. There are then fees associated with the mortgage including the booking fee, arrangement fee and mortgage valuation fee. We recommend including an additional £2,500 on top of your deposit in your budget to cover the costs.
Understand legal requirements and certifications
Before you can rent out your property, you must ensure you comply with all the legal requirements for a buy-to-let, including obtaining:
A gas safety certificate
An electrical safety certificate
An energy performance certificate
Landlord’s and building insurance
A House in Multiple Occupation (HMO) licence if the property is to be rented by three or more people who are not from the same household
Certificates for fire safety requirements
Check for restrictive covenants
A covenant is a restriction placed on a property, often placed by a developer or property manager, to prevent owners from making alterations to the building and surrounding land.
For example, a restrictive covenant may be in place that you cannot display a ‘to let’ sign – this is common in new-build properties. In some cases, you cannot sub-let without getting consent from the developer or property manager each time.
It is important that tenants observe the rules of the covenant as it would be the landlord who would be held in breach as the owner of the property, so make sure tenants are aware of the rules from the outset.
Uphold good communication with your agents
Ensure you are always kept in the loop with the seller, your estate agent, mortgage adviser and conveyancer. Keep your phone on at all times in case you need to be informed of any major turning points. Additionally, keep up to date with your emails, including checking your junk, as conveyancers will often send over documents via email.
Take extra care in filling out paperwork
It is important to ensure you read all contracts in full detail and fill in all paperwork openly and honestly. Any incorrect paperwork could lead to legal problems in the future. Taking extra caution when filling in forms can save you a great deal of time in the long run.
Ensure you are fully satisfied with your final arrangements and negotiations
For first-time investors, you may go into a contract not fully understanding what is in your best interests. Your conveyancer will be able to provide you with the best possible advice to ensure you get the best deal for the short and long0term. If at any time you are not satisfied with your agreements, it is vital you speak with your conveyancer and they will endeavour to resolve any issues before it is too late.
Find a suitable conveyancer
It’s important to find an experienced conveyancer who will provide a thorough service when you’re buying a home. Your conveyancer will be able to give legal advice, handle contracts, undertake important searches, deal with the Land Registry, and the transfer of funds. Ensure that they are certified by either the Solicitors Regulatory Authority, Council for Licensed Conveyancers or the Law Society.
*Jacqui Harley is a licensed conveyancing technician and a conveyancing executive at Grantham-based multi-law firm JMP Solicitors, heading up the Residential Conveyancing department. For further advice, please call Jacqui on 0800 085 9966 or email firstname.lastname@example.org.