Buy to let advice and mortgages – solicitors, mortgages, and conveyancing
Becoming a buy-to-let landlord is the way many people in the UK aim to secure a stable long-term financial future for themselves.
This is a situation that is helped by the ongoing UK housing crisis. This means there is never a shortage of people looking for somewhere to rent.
That said, being a buy-to-let landlord does require some thought. You have legal responsibilities that need to be met. Setting up the arrangement itself takes additional care.
Here is everything you need to know about the buy-to-let process and how to set yourself up as a landlord safely, legally, and properly prepared:
What Is The Meaning Of Buy-To-Let?
Buy-to-let is essentially just what it sounds like. This is a property you are buying with the aim of renting out to someone else.
There are good reasons why so many people choose to become a buy-to-let landlord:
- This is a reliable source of long-term income
- There is also a high chance you’ll make capital gains if you ever sell (i.e. your property will be worth more money when you sell it than when you bought it).
That said, the mortgage conditions and other legal responsibilities of being a buy-to-let landlord are slightly different to normal. It’s important to understand how the system works before you decide to purchase.
Buy-To-Let Financing And Mortgages
Buy-to-let mortgages are different to the kind of arrangement you would have if you were buying a house to live in yourself. In fact, the small print in most “standard” mortgages will prevent you from renting out a property you have purchased.
A buy to let mortgages are designed to help you buy a property with the sole intention of letting it out. They differ from a regular mortgage in other ways as well. First and foremost, most buy-to-let mortgages are what is known as “interest-only”. This means you only ever pay off the interest. You cannot ever pay off the amount you actually owe on the mortgage.
There also tend to be more fees attached than a “standard” mortgage, such as:
- Lender arrangement fees (these can be anywhere from 0.5 to 2%)
- Valuation fees (these will often vary depending on your valuation)
- Booking fee or reservation fee (to demonstrate commitment, usually several hundred pounds)
How Much Of A Deposit Do You Need For Buy-To-Let?
One further important consideration is that buy-to-let mortgages almost always require a larger deposit than a “standard” mortgage does. This will normally be at least 20% and more likely 25%+ depending on your lender. They also come with a higher rate of interest attached.
Buy why is this? In short, it’s because mortgage lenders perceive buy-to-let arrangements as being higher risk than a normal mortgage. This is because:
• Most buy-to-let landlords rely on rental income to cover their mortgage payments
• There may be times when the property is not occupied and thus rent isn’t being paid
• There could be times when you have difficulty collecting rent for some other reason
Do I Need A Solicitor To Get A Buy-To-Let Mortgage?
As with all mortgages, buy to let mortgages will have the requirements of your lender will normally mean you have to use a solicitor if you want to borrow from them. Even on top of this, there is a lot of money at stake and legal risk to consider. You’ll almost certainly want to use a solicitor.
The conveyancing solicitor you instruct when purchasing a buy-to-let property will do a lot for you. As well as liaising with all of the other parties involved in buying a property – the seller’s solicitors, the surveyors, and so on – they will:
- Draft legal agreements and contracts – making sure all forms and documents are in order and that you won’t face any unexpected conditions or problems later.
- Perform searches and checks – this is still a property purchase and, if anything, more care and further checks need to be made during buy-to-let property purchases.
- Advise on tax and landlord responsibilities – a solicitor specialising in buy-to-let properties and conveyancing can advise you on your legal responsibilities as a landlord, when to pay
Stamp Duty Land Tax and how much it is.
Can I Rent Out My Existing Home?
Some people prefer to buy a new home and turn their existing one into a rental property. This is a common solution but you will likely need to change your mortgage type to do it..
This will almost certainly require a solicitor, even if only to make sure your new agreement is what you’re expecting it to be. In addition, of course, your lender may insist on it.
How Much Are Solicitor Fees For Buy-To-Let?
Buy-to-let conveyancing fees are likely to be roughly the same as standard solicitors fees for buying a property. A very approximate figure might be somewhere between £600 and £1500.
The large size of this range is because of the wide disparity between pricing in different parts of the county and between individual law firms. Simply choosing the most expensive option is no guarantee you will get the best service either.
It’s worth noting that VAT will potentially be charged on top of those estimates and other fees can be added if any additional legal work is required.
Buy-To-Let Advice and Mortgages – Solicitors Near Me Finds You The Ideal Conveyancer
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