UK Property Buying Process
The buying process for purchase of investment property is similar to that of purchasing ‘own use’ property from third party sellers, but is simpler and can be completed in a shorter timescale. Please watch Section 4 of the Main Video on our home page which explaines these 10 steps in detail.
Buying Investment Property
The process for the Investment Properties is simpler as there are no third parties involved and the rental and management of the property does not change as it continues to be managed and rented out by us or our partner companies. There is no mortgage lender involved. The prices are fixed (in-line with the market and rental yield) and a prior reservation agreement provides security and certainty for us and for you in the purchase process. Thus the process is quicker and the buyer starts getting guaranteed rent 1 month after Purchase Completion.
Here are the steps involved:-
STEP 1. Make Enquiry & Get Brochures
Watch the Main Video on the Home Page, Complete an Enquiry Form with your email and details and get further information.
STEP 2. Discuss Your Needs
Our staff will email you information (check your spam or junk folder) and can call you to discuss your needs. Is investment property in the UK right for you or not? We aim to provide you with good honest advice and will tell you if such a property will not meet your needs. You can make a provisional decision on type of property e.g. Type H2. this can be changed later.
STEP 3. Provide Ownership and ID information
First you need to decide if property to be purchased is by a single owner or multiple owners, or company. If multiple owners (e.g. husband and wife) you will also need to consider the type of joint ownership. Most investors go for single person ownership as this keeps things simple.
Your ID information will be required BEFORE we can start dealing with you or showing you any property or provide official quotes or draft agreements. This is regulatory requirement in the UK and some overseas buyers do not appreciate this. You can scan and email this information to us. We are required by Law to keep all such information confidential. The ID information required will be:-
- Passport copy (photo page)
- Address ID e.g. Driving Licence, ID Card or Utility Bill
Once we have your ID information, we can provide more specific details and a draft Reservation Agreement and clearly layout how the purchase process will proceed in your particular case. Clients normally make a reservation of the most popular H2 or H3 Type first. At property selection they can upgrade or downgrade to other types from the entire list.
STEP 4. Arrange Video Meeting
Prior to Covid, most investors would visit us – either prior to purchase or after purchase. This allowed us to meet them at our offices and show them our operations and answer all of thier questions directly. Now we are finding that a good Zoom Video Meeting achieves 90% of the benefites of a visit and provides much more convenienece.
After you have received the reservation agreement we can arrange a video meeting with a Senior Director of up to 1 hour. Many meetings are with Dr. Tariq who can advise clients and answer all questions. He can explain how we work and the details of the buying process. Let us know best times for the meeting and we will send you a Zoom Video Link. You can click the link and see us. It is best to arrange the meeting after you have received the agreement. . If you wish to visit, then this can be discussed and arranged after the Video Meeting. The visit is just to provide you with additional confidence and is not normally needed as the video meeting covers everything. You will not be able to select a specific property at any visit – see below. Selection is in reservation date order and via Property Sheets.
STEP 5. Make Reservation
After the Video Meeting, once you are happy to proceed, make the reservation by signing and scanning back the agreement. The property type in the agreement is provisional and can be changed later, after specific property selection. Your reservation payment is £3,000 and remains in the client account until property transfer. Reservation means that you have certainty of purchase (of any property from the range), a fixed timeline, fixed price, and priority access to the list – as demand is higher than supply. Reservation also allows us to get all of your ID documents attested and ready so that completion can occur immediately after selection
STEP 6. Property Option Sheets
Due to demand outstripping supply, there is on average, a 6-week lead time between reservation and specific property selection. Depending on supply this may be shorter or longer.
When it comes to your turn, we give you around 20 Property Options Sheets for you to select a specific property. These will include the entire range of properties available that week -not just the category reserved – so you can downgrade and upgrade as per your budget and preferences. There are also subtypes which are slightly cheaper or more expensive than the main types, depending on their value and rent. Each sheet outlines the location maps, street address, pictures, floorplans and details of each specific property. Within each category (e.g. H3) the properties are very similar indeed. We do our very best to price all of them proportional to their value, rent, location and future potential – so you can select any, and the risk of selecting a poor property is minimized. You can select any from the list that meets your budget and preferences, and you will be fine.
STEP 7. Select Specific Property
Study the Property Options Sheets which will be in ascending price order. Take your own preferences into account for budget, looks and location; and select a specific property you like. No matter which you select, your investment returns will be proportional to the set price. We can also hold a specific property for you if you wish to view it (Covid rules permitting), or you can view it later. The others from your selection list will be released to other clients. If selected property is still under renovation, we undertake in the agreement, to renovate to the set standard. Your Guaranteed Rent will still start 1 month after purchase completion date – even if renovation or rental is delayed for any reason.
As the properties in the list may already be rented or be located all over the North, 100’s of miles apart, it is not practical to make visits during the selection process. This system works well for clients and is very efficient. During the Covid Pandemic, over a period of 15 months, we sold over 400 houses without a single property viewing and all of our clients were satisfied with their selections.
If clients are unable to make a selection, they can wait until the next batch of properties. Only once a client is 100% happy with the selected property does it get transferred to them.
After selection the agreement is amended to the selected property type and pricing and the final payment worked out.
STEP 8. Property Transfer & Ownership Documents
We follow the “Facilitated Buying Process” (see main video) and normally act on your behalf to ensure all the steps are taken to legal exchange of contracts and complete the property purchase after your full payment.
Local external independent Law Society Solicitors act for buyer, do searches, check titles, complete purchase, & register under buyer’s name at UK Land Registry. Satisfactory completion of this process is also guaranteed by us. Completion is normally about 4 weeks after property selection (if all documents including bank statements and final payment ready) and Registration is normally 6 weeks after completion.
Following completion, you get a completion summary from the Solicitors and then the property is registered under your name at the UK Land Registry by your solicitor and the solicitor will provide evidence for this after registration. We will ensure all documents are sent to you. You can also check your ownership directly with the Land Registry which maintains and on-line register.
STEP 9. Post Completion & Guaranteed Rent
Rent starts 1 month after Completion Date and is paid into the owners own bank account at the end of each calendar quarter.
Bank Details: We get your bank details (UK or Overseas) & pay rent at end of each calendar quarter
HMRC Application: If you are resident overseas, we register you with HMRC as non-resident landlord. We complete the application and send for you to sign and return.
Net Guaranteed Rent System: We are effectively your tenants and agree to pay guaranteed net rent at 6% of property price per year and manage and maintain the property at our cost. We do everything. You do nothing, and get passive income for the long term.
STEP 10. After Purchase Services
Most clients want to keep properties for long term. We are set up to provide services for 20+ years and longer.
Long-term Guaranteed Rent: Net Guaranteed Rent System continue after the 3 years & rents are reviewed at the end of each calendar year after the initial 3 year period. – see Property Investment Page for details
UK Will Service: You can decide who will own your property after you. E.g. Children – We provide a free template for you to complete the Will and lodge a copy with us.
Annual Tax Filing Service: We are official HMRC Tax Agent and can provide this. Most clients inc. overseas nationals have the UK Personal allowance of £12,570 – so annual rental income below this is effectively tax free. But tax filings still need to be made if you own a property.
Open Non-Resident UK Bank Account: We can provide reference letters after property is registered to help you do this.
Future Resale: You can resell easily in the future and we can also buy back at market price. However, you should NOT buy, if you wish to resell within 2 years as you will not make much profit.
Buying Own Use Property
Buying own use property from third parties follows a more traditional process that can stretch to an average time period of about 3 to 4 months. The third party may have to purchase a house before completion can occur. There is also more uncertainty regarding completion as there is no pre-agreement equivalent of the reservation agreement. Theoretically the buyer can pull out at any time before completion of contracts but this does not happen often.
If you are resident in the UK, a mortgage lender may also be involved and would result in additional steps in the purchase process. As prices of such property is likely to be higher, UK stamp duty charge may also be payable.
Please note that unlike our service for investment properties, a buyer’s fee is payable by the buyer to us for buying own use property from third parties. No buyer’s fee is payable for the investment properties.