Buy to Let Property Conveyancing Solicitors

Buy to let conveyancing is the legal process of transferring ownership of a property to you when you are intending to use it as an investment to let out to tenants.

The conveyancing process on your buy to let property begins when the property seller accepts your offer on the property and you instruct our conveyancing solicitors to act for you.

When you instruct Stephen Rimmer Solicitors for a buy to let property purchase, a specialist conveyancer will be assigned to your matter and will guide you seamlessly through the whole buy to let conveyancing process.

On your behalf, we can deal with matters such as:

• Contacting the seller’s solicitor to get the contract pack.
• Checking contracts, raising any queries and doing checks and searches to make sure there are no problems with the property or restrictions on renting it out.
• Advising you on tax, environmental and planning laws that will apply to your property, and which will need to be taken into consideration in view of any plans you might have for the property in future.
• Helping ensure you get the correct type of mortgage for your buy to let property investment which is a different type of mortgage to a standard residential mortgage.
• Drawing up a contract for you to sign and help you with the necessary legal documents such as a deed of trust or a tenancy in common agreement.
• Exchange of contracts which will happen when a completion date is agreed. You will then be legally committed to go ahead with the purchase.
• Preparing the transfer deed before sending it to the seller’s conveyancer for them to complete.
• Asking your mortgage lender to advance the money if you are using a mortgage to fund your property purchase.
• Sending the purchase amount to the seller’s solicitor once they have moved out of the property.
• Helping you calculate any stamp duty owed and then pay HMRC.
• Registering the property in your name with the Land Registry.
• Helping you prepare legal documentation for renting your property such as a tenancy agreement.

Every property transaction is different, facing a unique set of issues and challenges which means timescales can differ. A typical time frame for a simple straightforward transaction is around 8-12 weeks, based on factors such as how quickly searches can be done, mortgage offers made or the circumstances of other parties involved in the chain.

Landlords can buy rental properties using a company structure known as an incorporation.

Incorporation is a way of setting up your buy to let property business as a limited company so that it is a separate legal and financial entity from you as an individual.

You can set up a company by registering it at Companies House but we recommend that you consult us first on whether you should incorporate or not.

Benefits associated with incorporating your buy to let business could include better tax rates – but there are also lots of drawbacks to consider. For example, it is important to know whether the costs of becoming a limited company might cancel out any potential savings.

It is possible to make large potential savings when choosing the company route to purchase a rental investment. Reasons to consider moving your buy to let business to a limited company structure, might include:

• Potential tax savings
• Overcoming financial pressure of the buy to let squeeze
• Offsetting mortgage interest against profits
• Limited liability – which offers you more protection should the business fail than if you are a sole trader

Some of the drawbacks include:

• Lower income taxpayers or those with small buy to let portfolios tend to benefit less from setting up a company to hold buy to let property
• Tax relief has been phased out for those with investment property held in their own name – tax legislation can change quickly for companies too, becoming more or less favourable depending on policy
• Lots of administration and paperwork to deal with such as company annual accounts to go to Companies House, corporation tax returns, PAYE salaries, pensions and self-assessment tax returns
• Stringent accounting standards of the Companies Act means an accountant will be needed
• Costs associated with running a company will need to be considered to determine if incorporation is the right route for you and will save you money in the long run
• Requirements to disclose more information about your company which could include the balance sheet, profits and losses, salaries and margins
• Difficulty in getting a mortgage since fewer lenders are willing to lend to companies. You may, therefore, find it difficult to get the best mortgage deal. In this situation, an independent mortgage adviser will be able to discuss your options and help you find the best deal
• Costs of transferring existing properties into a company structure include capital gains tax and stamp duty
• Complexity and legal expense around exiting the business to realise value

The best way of determining if it is worth switching your buy to let business to a limited company structure is to talk to our limited company buy to let conveyancing solicitors.

If you would like to rent out a property that has a residential mortgage, you may be wondering if you can convert your existing mortgage to a buy to let one, easily.

When renting out a property that has a residential mortgage, you will need to make sure you do one of two things.

1. Obtain consent to let from your mortgage lender – This is because you will need to ensure you don’t breach the terms of your mortgage agreement. Also, when intending to let out your property, on a short-term basis (6-12 months), consent to let may be appropriate, especially where you plan to move back into the property sometime in the future.

It is worth considering that your lender may choose to not grant you consent to let for reasons such as, your let is too long, monthly rent is insufficient, you have mortgage arrears or they believe your intention was always to rent out your property.

If they do give consent, you will be able to let your property to whoever you wish but your lender is likely to stipulate the length of the tenancy and may require an assured shorthold tenancy agreement for 6 to 12 months, for example. They may also revise your interest rate and charge you admin fees.

Or

2. Remortgage your property onto a new and specific buy to let product. Where your lender does not grant you consent to let, you will be able to switch your residential mortgage to a buy to let mortgage. This means you would remortgage with a new mortgage product which could be with a different mortgage lender.

When remortgaging, your lender will need to determine that you meet their affordability criteria. They will calculate how much you can raise on your current property and you will need to work out how much you will need to borrow and what rental income you need to charge.

What you choose to do will depend entirely on your circumstances and the reasons you want to let out your property including the length of time you want to let it out for.

We can help you to determine whether consent to let or a buy to let remortgage will be your best option, depending on your situation.

A buy to let mortgage is not the same as a residential mortgage and they are, usually, a more expensive product. You will need to organise the right kind of buy to let mortgage to fund your buy to let investment property, correctly.

We will review your lender’s mortgage offer to check the conditions attached and raise any issues that you might need to be aware of.

Your mortgage lender will sort out a mortgage valuation to confirm that the value of the property sufficiently covers the value of the loan.

Property surveys that you will need to conduct are down to you and will depend on how thorough you want to be and what your budget can stretch to. Surveys might include condition reports, a home buyers survey, a home condition survey or a building survey.

You will also be required by your lender to take out appropriate building’s insurance on your new property before exchange of contracts can take place. You will be responsible for the property once exchange of contracts happens so it is important you take out the right level of cover to protect you.