Buying to Let
Buying to let has grown significantly over the past few years, and with relevance in the current housing climate, it can be important for all of those getting on the property ladder to understand how buy to let transactions work. Marcus Baum are able to offer our expert knowledge, dealing with Buy to let transactions on a regular basis.
Chris Maddison has created the following guide on Buying to Let which we hope may be useful for anyone considering.
When buying to let, much of the purchasing process is the same as an ‘ordinary’ residential property purchase. There are however numerous pitfalls to avoid.
If you are considering letting your existing property, there are certain considerations that you will need to consider:
- If you have a leasehold property you will need to ensure that your lease permits you to let your property. Even if your lease does permit this you may require the consent of your freeholder’s
- Existing mortgage – if your property is subject to an existing mortgage you will require their consent to let the property. It may be necessary to ‘remortgage’ the property to obtain a ‘Buy to Let’ specific mortgage
It is important to have a written tenancy agreement in place; Assured Shorthold Tenancies (ASTs) are the most typical. ASTs are a requirement of most mortgage companies. Each mortgage company will also have certain requirements in relation to the AST as well as requirements in relation to certain types of tenant that you are permitted to let to.
You will have to pay the following taxes:
- Income tax on the rent
- Stamp Duty Land Tax when you buy the property
- Capital Gains Tax when you sell
The Legal Process
Once your offer is accepted by the vendor and we are instructed, your Solicitor will begin the legal process (please see our separate ‘Buying’ fact sheet).
As the purchaser you will need to:
- Arrange the mortgage/see a mortgage broker
- Arrange the survey/valuation
- Instruct a Solicitor
- Provide the deposit or balance of deposit in time for exchange of contracts
- Find a tenant(s) – or instruct a letting agent
- Ensure that the ASTs are prepared