Buying a buy to let property
In many ways, the process of buying a buy to let property is very similar to other conveyancing transactions. However, there are often steps that require additional specialist legal advice that Stephensons are able to offer.
The deeds to the property must be checked in detail. Typically the deeds may contain what are known as covenants restricting the use of the property and preventing it being let and occupied by a non-owner. Alternatively in the case of flats and apartments the consent of the landlord or management company may be required in advance of the letting.
If the property that you are buying is already tenanted and being sold subject to the sale, checks need to be made. The existing tenancy agreement along with terms upon which any rent deposit is held should be checked in detail.
The purchase of a buy to let will invariably result in the payment of a higher rate of SDLT (Stamp Duty).This additional cost should be factored in before deciding to purchase. The purchase of second properties is generally subject to an additional duty of 3% on properties worth more than £40,000.
Many mortgage lenders offer specialised buy to let products. Under no circumstances should you buy a property intending to let it without declaring it in advance to your mortgage lender. The mortgage offer is often complex and contains a number of special conditions that must be complied with before release of funds.
Selling an investment property
The important consideration is often as to whether the buyer wants to buy the property with vacant possession or subject to the existing tenancy.
If vacant possession is required the tenant must be allowed to remain until the end of the contractual term after which a notice to quit may need to be served. This can of course cause delay and must be factored in during the negotiations.
If the buyer wishes to buy subject to the tenancy then an appropriate rent authority will be needed together with an apportionment of rent paid up to the date of completion. The buyer will also need to see the details of any rent deposit which must of course be held in one of the regulated schemes.
It must be born in mind that the sale of an investment property will inevitably lead to Capital Gains Tax liability. As you have never lived in the property you will not be able to claim private dwelling relief as you would on your main residence. It is advisable in these circumstances to seek specialist tax advice before committing to any sale.
For advice on any aspect of buy to let property please contact one of our specialist commercial property solicitors on 01616 966 229.