12 questions people ask about buy-to-let progression

No matter what you’re doing, whenever you talk to an expert you always come away thinking, “I wish I’d have asked that.” When you meet with us to discuss your buy-to-let property investment, we’ll cover every step of the way.

 However, in our experience there’s always another question to be asked – every buy-to-let investor is unique, with different concerns. It may be that you go away from that first meeting and only days later think of something you can’t remember we covered or aren’t sure that we answered.

In this chapter, we’ll answer the most common questions that we get asked about that process. As you’ll discover from these questions, our clients are certainly a diverse group of buy-to-let investors and landlords.

Do I have to use an Ezytrac recommended solicitor?

Yes. Many of our clients have their own solicitors that they’ve worked with before, but the solicitors that we work with have very specific experience and expertise that benefit you to the full.

If I do use an Ezytrac recommended solicitor, what benefits could I expect to see?

We have handpicked the solicitors we recommend for their specific expertise and experience in the buy-to-let market. If you’re investing in an off-plan or new build property, we’ll recommend a solicitor who we know understands the process of doing so inside out.

This means you can rest assured in the knowledge that there won’t be any hiccups throughout the process. You won’t be asked unnecessarily for the same documentation twice. With an intimate knowledge of the conveyancing and other legal processes involved in the buy-to-let market, these solicitors will simply get on with the job – and that generally means lower legal fees.

Can I invest in buy-to-let in a limited company name?

Yes, you can, though whether doing so is your best course of action very much depends on your individual circumstances (for example, your tax position and domicile), your aims for the investment, and your property investment strategy.

In general, if you are a basic rate taxpayer you may be best to avoid investing in property via a limited company. If you’re a higher rate taxpayer and you’re not looking to take a salary from the limited company, you may be able to reduce your tax liability from 40% (personal income tax) to 20% (corporation tax).

If you’re considering investing via a company set-up, read the article “Is a limited company structure right for your property investment?”.

Can I pay my fees offshore?

Whatever fees and charges are payable, they can be paid offshore. Any rental income made can also be paid offshore. However, certain tax loopholes that used to exist have since been closed. Foreign investors as well as UK investors have to pay their income taxes, SDLT, and capital gains tax. These taxes are payable to the HMRC, though for foreign investors living in countries with a double taxation agreement, the taxes paid in the UK will not have to be replicated in their own country.

What happens if I cannot secure a mortgage upon completion?

When we work with you, we’ll suggest that you use a mortgage broker who is well versed in buy-to-let property deals. They will be well placed to react to any market or regulatory changes that may affect a lender’s ability to extend the mortgage it had previously agreed.

Generally speaking, you are obligated to tell the seller if you can’t get financing. There may be clauses in the sale agreement that allow you to receive your deposit back, but if the mortgage has not been extended because of your own fault, you may lose the deposit. In the small print of many mortgage agreements, you’ll find that the lender protects itself in a range of circumstances such as you becoming unemployed.

Whatever the reason for your mortgage not being extended as previously promised, you run the risk of losing your deposit. Fortunately, we have had very few clients find themselves in this position.

What if I can’t meet the 28-day exchange deadline after paying a reservation fee?

After paying a reservation fee on a new build or off-plan property, you’ll generally have 28 days before having to pay your deposit and exchange contracts.

If you miss this deadline, the developer may withdraw some of the incentives offered or even pull out of the sale altogether. While your progressions team will work hard to ensure that this doesn’t happen, if you can’t exchange at the specified date, you could find that you lose your property and reservation fee.

This is why it’s important to keep on top of all parties involved in the deal. Our experience is that it is very rarely the buyer’s fault that a deadline is missed; most commonly, it is the fault of prevaricating solicitors or mortgage lenders.

Why do I need to provide my certified anti-money laundering documents (again)?

The anti-money laundering laws are designed to prevent the UK financial system being used for financial crime. The law requires certain institutions to collect evidence that supports your legitimacy as an investor and the legitimacy of any funds you use to invest. The law appertains to:

• All new clients
• Existing clients in certain circumstances
• Connected third parties

If we, or anyone else in the purchasing or property management process requires AML documentation, it’s simply because it’s the law!

What if I’m buying off-plan and the developer goes bust?

For many property investors, including buy-to-let investors, there are a number of very beneficial advantages when buying off-plan. However, one concern that you might have is what happens if the developer goes bust.

In this case your liability will be limited to the money that you have paid up to the point that the developer went bankrupt. It may be that you will be able to claim your deposit back if the land has not been transferred into your name. Your deposit should have been kept in a secure, third party account for security – however, there may still be a delay in accessing your funds.

When a client works with us to source property, they benefit from the research that we’ve already conducted. We also ensure that we only source properties for investment from developers with an impeccable track record.

What if I change my mind and decide I no longer want to invest?

Assuming your have exchanged, in the majority of circumstances, you will lose your deposit. However, there may be exceptional circumstances that are specifically noted in the sale agreement which allow you to withdraw from a commitment to purchase and have some or all of your deposit repaid.

How much will my off-plan property be worth after exchange?

When an investor buys off-plan, they generally buy at a discount to the current market price. When the purchase completes, the value of the property may have increased.

The investor therefore benefits from a property that they have not only bought at a discount, but also has increased in value since they paid their deposit.

Of course, there is no guarantee that the property will have increased in value – it very much depends upon how the local property market has performed.

To assess how much profit has been made to date, the investor should seek an independent valuation upon completion.

When will Ezytrac start marketing my property to potential tenants?

We’ll start pre-marketing before completion using around 2 months, and then swing into full marketing upon completion.

What happens if you can’t let my property?

With a national coverage and local presence, and as a member of the Association of Residential Letting Agents (ARLA), you can be sure that your buy-to-let property will benefit from our extended reach (as well as our property management capabilities).

We’ll assess your property for rental valuation, and attempt to achieve the highest possible rental price we can. However, we must also weigh up rental price with void periods − it may be better to accept a slightly discounted rental rather than hold out for a higher amount and have your property remain empty for several weeks (or months).

Our mission is to make your property investment successful from the off, and that means getting your buy-to-let tenanted as soon as possible. Regarding this, we beat the national averages by some way: 95% of the properties under our management are rented within two weeks of them becoming available.

Okay, let’s get on with discussing the sales process. We’ll start by looking at your responsibilities during the process, before then examining the network of people and connections you’ll need to be successful.

If you have question or want to learn more about this why not chat with the team 02071508844 or email me.