Purchasing Buy to Let Property

  • The first step is to create a financial strategy and calculate how much you can afford to invest.
  • Find out about other costs (e.g. solicitors, stamp duty, survey/valuation fees, broker/lenders fees etc.)
  • Decide which solicitor you are going to use.
  • Research the market. What type of property will provide the best returns (i.e. increase in value and rental returns). Will you manage the properties or will you employ somebody else to manage them for you?
  • When you have found the right property, and have all your finances in place, make an offer
  • When the offer is accepted, tell your solicitor the basis of the deal you have agreed. NOTE: from this point onwards you are spending your own money. The vendor does not have to sell the property to you until you have exchanged contracts. The vendor could, for example, accept a higher offer from somebody else and you would have wasted your money. Gazumping is commonplace. You need to exchange contracts quickly to stop this happening to you.
  • Contact the vendor’s agent on a regular basis to report your progress and to check on progress with your property. Progress reports to the vendor and / or his estate agent will significantly reduce the risk of your being gazumped. Advise them what is outstanding and what is being done to progress matters. Report to them every four days.
  • Speak to your solicitor on a regular basis (good ones will call you), ensure they are chasing other involved parties.
  • It is now up to the solicitor to exchange contracts. They cannot do this until you can prove that you will have enough money to complete the purchase. This usually means that a mortgage offer is required prior to exchange of contracts. Also, the solicitor is responsible for ensuring that you are purchasing what you think you are purchasing. This will include obtaining local searches, making sure that all previous mortgages are cleared, checking boundaries etc.
  • The solicitor will also be responsible for handling the purchase money, i.e. receiving it from the lender and paying it to the vendor. In the case of a refinance the solicitor will also pay off the old mortgage with the new mortgage money.
  • Once contracts are exchanged, the property is contractually yours. You must, therefore, insure the property at this point. Use established buy-to-let insurance brokers to minimise costs.
  • Completion usually takes place about one week after exchange of contracts. Once completion has taken place you can let the property, subject of course to its condition. If the property is vacant at the point of exchange of contracts, it is in your interests to negotiate a longer period between exchange of contracts and completion, together with negotiating access to the property so that you can decorate it. The vendor does, however, have the right to refuse this.
  • Monitor the property value so that you can capitalise on opportunities to release further money through remortgaging or further advances, in order to fund deposits on more properties