The legal side of investing in property
In property investment, especially if you’re buying new build or off-plan, a bog-standard conveyancer is probably not going to cut the mustard. As a buy-to-let investor, not only are you making a large commitment now, but you’re investing for your future. You’ll need to get the best advice that takes into account your current personal and financial position.
In this article, we look at the differences between a conveyancer and a solicitor. We’ll also discuss what you need to consider, and the questions to ask when assessing a solicitor in order to help you make the best choice of legal representation. Finally, we’ll introduce you to four solicitors that we’re happy to recommend.
Isn’t a solicitor a solicitor?
One of the misconceptions that we hear most commonly is that, when it comes to property transactions, a solicitor is a solicitor, and their job is to make sure the conveyancing takes place smoothly. This couldn’t be further from the truth. Conveyancing solicitors generally have a deep knowledge of property law.
“Isn’t that what I need?” we hear you ask.
Well, yes; but you also need a whole lot more. If you’re buying a home to live in, then a conveyancing solicitor is probably exactly what you need.
But as a buy-to-let investor, you will probably need a lot of other advice. For example, you’ll probably need to take advice about tax and property. A conveyancer won’t be able to provide that advice. You may need to consider the implications for inheritance tax, or divorce proceedings, and so on.
There’s a huge difference between a conveyancer and a solicitor. There’s also a world of difference between a solicitor and a solicitor with specific experience in the buy-to-let market.
What should you consider before hiring a buy-to-let property solicitor?
There are three main considerations when selecting a solicitor to act for you when making a buy-to-let investment:
You’ll want to hire a solicitor who has experience in the type of transaction that you’re proposing. It’s all very well having the certificates and theoretical knowledge, but the last thing you want to be is an inexperienced solicitor’s guinea pig or testbed.
A home purchase is a relatively straightforward transaction. It’s a home you want to live in. There’s no income that you’ll make from it. You’re not going to be subject to capital gains tax. As far as property deals go, buying a home is just about as vanilla as it gets.
When you’re buying as an investment, transaction complexity rises. If you’ve employed a conveyancer and something goes wrong, you’ll find that the conveyancer will probably need to consult with a solicitor with specific knowledge and experience. That’s going to increase your costs.
A solicitor with specific buy-to-let property experience will be able to provide advice that is needed and necessary, and more importantly, on the ball. So think about your investment first, and then match the solicitor to it.
This is one of the major reasons people mistakenly hire a conveyancer instead of a solicitor. If you hire a conveyancer, you might save £500 or so over the cost of a solicitor. If your investment is straightforward, you’re working to a tight budget, or the property value is exceptionally low, then a conveyancing solicitor might be suitable.
A conveyancer is likely to be working on a lot more cases than other solicitors, too. So there is also a potential issue of a lower level of service.
Before choosing a conveyancer over a solicitor, think about their experience, the complexity of your potential needs, and whether that saving of a few hundred pounds might end up costing you a lot more.
Seven questions to ask a solicitor before hiring them
Now that you’ve decided which type of solicitor you need, at your first consultation you’ll want to establish that the solicitor you’re speaking to will be right for you. You may have been referred to a solicitor by friends and family, or read a good review about a solicitor in particular. The majority of our clients select from one of our recommendations. However you choose your solicitor, the first session with them is the most important.
This is your chance to ensure that you’re compatible and that the solicitor you’ve selected can do what is needed. After the first session, you’ll have a more detailed discussion about your investment property and other important factors that may have a bearing on your strategy and buy-to-let purchase.
Here are seven questions that should enable you to establish the solicitor’s credentials:
- How long have you been a solicitor?
You want to know what experience and expertise the solicitor has. This question is as much about the firm as the individual solicitor: in a firm of solicitors that have the relevant experience, a newcomer will have a lot of free support to fall back on.
- What type of property deals do you represent and advise on?
You’ll want to employ a solicitor who has specific experience in the type of property deal you are making. Remember, too, that a solicitor who has represented a client, say, in the purchase of an off-plan apartment where that client was buying as a home has a different experience to one who has represented an investor making the same purchase.
- Who is a typical client?
A solicitor who advises businesses or companies on property investment issues will have a different experience to one who deals with individuals. One who usually consults with multi-millionaires will have a different expertise to one who deals with the person who is investing their life savings in a single property investment. It’s important for you to know that your solicitor understands you as well as the investment.
- How many similar cases to mine have you represented?
Don’t be shy: ask to see the solicitor’s track record. Ask to see references, too, from similar clients.
- How will you communicate with me?
You want to know how often they will be in contact, and how they will contact you. There may be circumstances that don’t warrant any communications, and others that do. Set these ground rules early in the relationship, and you won’t be disappointed.
- Will anyone else be working on my case with you?
A solicitor is likely to work with other people on your property deal. There may be legal secretaries and researchers involved, all of whom ease the workload of the solicitor. This ties in with the question above: it could well be that you receive a phone call from a junior solicitor or legal secretary rather than your solicitor themselves. You may also want to know who to speak to in your solicitor’s absence.
- What are your fees?
Finally, you want to know what you will be charged and how. Will a charge be levied per hour, or will there be a flat fee? Are phone calls and letters chargeable events? (They usually are.)
When it comes to solicitors and legal services, you generally get what you pay for. It may be worth paying a few pounds more for the extra service, experience, and expertise.
When to hire a buy-to-let solicitor
Don’t wait until the ball is rolling to hire a solicitor. You wouldn’t want a football match to start without the referee on the pitch, or a game of tennis to be served without an umpire.
So, our advice is to hire a solicitor as early as possible in the process and certainly before you sign any paperwork. Have your solicitor review the contract of sale before you sign. They’ll be able to point out all the fine print that affects you and your investment, and may be able to help you negotiate favourable terms.
If you have question or want to learn more about this why not chat with the team 01522503717 or email me.
Other Sales Progression Articles By Caroline
Head of Sales Progression
If you have sales progression questions I am happy to provide detail answers to even the most detailed problems you face.
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