In recent years the property letting market has increased as rents and capital values in land have steadily grown and savings and investments elsewhere have stumbled. The demand for buy to let property has therefore grown as well and many are investing more in lettable property as a reasonably secure investment.
Particular issues arise when a person is buying a property to let it immediately, particularly with buy to let mortgages and continuing obligations and responsibilities after completion of the purchase. The mortgage lenders have particular criteria which need to be met by the borrower and buyer before the mortgage advance can be released to the buyer, in addition to the usual requirements relating to the solicitor’s certificate of title. Careful scrutiny of the title to the property and an understanding of the buyer’s and the lender’s requirements help to ensure that the purchase and mortgage are completed quickly and effectively. One of the lender’s requirements will be that the rental income is sufficient and reliable and the buyer will also want to make sure that the rental income is steady and problems with tenants and recovery of rents are minimised. It is essential that the lender’s requirements are met continuously after completion and for the duration of the mortgage, so the tenancy agreements must be in an acceptable form for every tenant as they come and go. The borrower will need to make sure that all other statutory requirements of a residential landlord are met, including dealing the tenant’s deposit, health and safety regulation, local authority compliance and building regulations.
Recent changes to Stamp Duty Land Tax charges on second homes and the reduction in availability of tax allowances on mortgage interest make the profitability of buy to let properties lower. As a consequence careful thought needs to be given to your tax and estate planning before proceeding with a buy to let purchase. Selling a second home may give rise to a charge to Capital Gains Tax. For further information, advice and assistance on tax and estate planning please contact Robert Goodchild or Katharine Palmer.
We can assist and advise on all stages of the buy to let purchase, mortgage, letting, taking deposits and rents and the on-going management of the let property on behalf of the landlord owner.