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 read the 10 steps below or watch the video at the bottom of this page or Section 4 of the Main Video on our home page which explains these 10 steps in detail. THIS IS THE PROCESS WE WILL FOLLOW
Buying Investment Property
The process for the Investment Properties is simpler as there are no third parties involved and the rental of the property does not change. You rent to us and we rent to our subtenants. There are no managing agents so you retain full management control of your property. There is no mortgage lender involved. The prices are fixed in-line with the market and rental yield, (but also adjusted if needed on a specific property, according to its subcategory, after taking location and local rental yield into account – such that all properties offered for selection represent equal investment value). Clients could select any they like and their investment return will be proportional to price. 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 net rent directly from us, 1 month after Purchase Completion.
Here are the steps involved:-
STEP 1. Learn About Our Offer – Watch Video. Website
Watch the Main Video on the Home Page, View webstire and pricing for each type. Also watch the DIY2 Deal video if you want to get more property in the future
STEP 2. Make Enquiry and Discuss Your Needs
Make enquiry on the website. 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 H3. This can be changed later, at time of property seelction in step 7. If you want to get more property in the future then let us know as the DIY2 Deal, may be better and the agreement is different.
STEP 3. Provide Ownership and ID information & Get Agreement
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. You can amend this later before property selection.
Your ID information will be required BEFORE we can start dealing with you or showing you any property sheets or provide official quotes or draft agreements. This is a 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, Utility Bill or Bank /Credit card statement showing your address.
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 H3 Type first. (or the type DIY2-H3 if selecting the DIY2 deal). At property selection they can upgrade or downgrade to other types from the entire list. Getting a reservation agreement does NOT oblige you to any purchase – It just provides full information before the video meeting.
STEP 4. Arrange Video Meeting
Prior to Covid, many investors would visit us – normally prior to reservation. This allowed us to meet them at our offices and show them our operations and answer all of their questions directly. Now we are finding that a good Zoom Video Meeting achieves 90% of the benefits of a visit and provides much more convenience.
After you have received the reservation agreement we can arrange a video meeting with a Senior Consultant 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. At the meeeting you can ask any questions and we can also advise on who should own the property (single, joint, company) and cover all of your conerns. He can also explain the details on the DIY2 Deal if you wish to build a portfolio of investment properties. 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 done via Property Sheets in step 7.
STEP 5. Make Reservation & Get Documents Ready
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 documents ready and ID verified so that completion can occur immediately after selection. The purchase process starts when you make the reservation. Demand is higher than supply and we do not wish clients to make a reservation until they are confident that what we are offering is what they want.
If you are making reservation for the DIY2 Deal, then the agreement will be different and at this stage you will be selecting the first property. The second property will be selected when you are ready for it (in 1 to 10 years). Initial reservation is normally for H3 but this can be amended to the actual property you select at step 6.
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. We constantly have about 60 clients in the pipeline who have reserved and around 10 to 12 houses are selected each week, this amounts to a lead time of about 6 weeks.
Before selection ensure that your ID has been verified and all required documents and 3 months bank statements (showing all the funds needed for the properyt purchase) or other documents showing source of funds have been returned. Admin staff provide full instructions on how the documents can be emailed to us and how ID verification can be completed.
ID Verification: In most cases ID can be verified remotely by a solicitor via a zoom video call. Our staff can arrange the video appointment with a suitably qualified UK lawyer or solicitor, and in such cases we will pay the verification fee to the law firm. At the zoom video call, the solicitor will meet you and view your original passport. They will also take a picture of you holding your passport. Then they will be able to to verify the ID as per the UK Land Registry standards. Such a solicitor will just perform ID verification only and is not involved in the property sales or conveyancing process.
Under Money Laundering (AML) rules, all property buyers must prove the source of funds. The easiest way to do this is to ensure all required funds are in your bank account around 3 months prior to the final payment. (Generally, funds that have been present in your account for 3 month are assumed by authorities to belong to you.). In such a case, 3 months of bank statement (these can be online statements and do not need to be certified) can be provided before the final payment is made from that same account. If, however, there are any large payments into the bank account in the 3 month period, which will be used towards the property purchase, these will need to be explained (e.g. inheritance, property sale, loan, salary, bonus, share sale) or bank statement of the source of the funds (e.g. your other bank account from where funds were transferred) may be needed before you make the final payment. If any such large payments have been gifted to you during the 3 months period, then a gift letter will be needed (we can draft this) and bank statement and ID of the gift donor will be required. If you provide 3 months of bank statements prior to final payment, and the whole funds required for the final payment are shown as being present at the start of the statements, then further evidence is not normally needed. Any cash deposits into your bank account cannot be accepted towards UK property purchase as the source of these is hard to prove.
STEP 6. Select Specific Property
When it comes to your turn, we give you maximum choice and present 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 location, 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 you like, 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.
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. 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. As the properties are guaranteed and will be maintained in a good rentable condition at our cost, viewings do not add any value, and we will provide post-renovation pictures instead of viewing.
If clients are unable to make a selection, they can wait until the next batch of properties. Over 90% of clients select on the first batch, the rest select on second batch about 6 weeks later. Only once a client is 100% happy with the selected property does it get transferred to them.
If you have made a reservation for the DIY2 Deal, then you will be selecting your first house at this step. The DIY2 deal will be amended to the property you actually select. You will let us know when you are ready to select your second property in 1 to 10 years. Then we can send you the list and details for the second property selection. That property can also be any type and we will apply the built-up Deal Discount as per your request to the property. For example if the second properyt price is £100,000 at that time and the built-up deal discount is £30,000 – then the property price will be reduced to £70,000. The agreement will be amended to the specific property you select and the second property will then be completed and transferred to you. Your rent will start on both properties, 1 month after completion of the second property and be paid at the higher rates of property values prevalent at that time (e.g. £100,000).
After each selection the agreement is amended to the selected property type and pricing and the final payment worked out prior to property transfers.
STEP 7. Property Transfer – Facilitated Direct Buying Process
We follow the “Facilitated Direct Buying Process” (explained in the video below and buying leaflet) and act on your behalf to ensure all the steps are taken to legal completion of the property purchase after your full payment. This direct process provides more certainty, speed and convenience and is underpinned by two main guarantees
- The property will be maintained in a good rentable condition, free of any structural or other significant issues, at no cost to the buyer. Should such issues arise in the future they will be fixed at no cost to the buyer. This guarantee remains in place for as long as the buyer remains a client of Find UK, and should they terminate the management at anytime in the future, the property will be handed back to them in a good rentable condition, free of any such problems.
This guarantee means that no matter which property you select, it will be renovated and maintained to a set standard at no cost to you. You do not need to worry about the property condition. Surveys and reports are not needed. Even if any issues were to be found on such reports, these would not matter as these will get addressed anyway at no cost to you. On average a property may be renovated 3 times in a 10 to 12 year period – each time the tenants move.
Purchase Process Guarantee
- The selected property will be transferred to the buyer with no significant issues with the local searches and titles. The buyer will become the registered owner of the selected property. Should there be any significant issues with Searches and Titles, then Find UK Property will offer to exchange the property for any other of the same type, that is acceptable to the buyer. As our Group of companies buy properties first, before transferring to our clients, the searches and titles are already checked, and confirmed to have no issues prior to transfer. There have never been any such issues in the past; however, the guarantee is provided for additional peace of mind of our clients.
This guarantee means that you do not need to worry about the legal buying process as this will be done properly and promptly. You will become owner of the property and will get all of the documents.
Prior to completion, checks are made again on local searches and titles. Completion is normally about 4 to 6 weeks after property selection (if all documents including bank statements and final payment ready). Then, once property is ready for completion, clients can make the final payment, normally to the same client account as the reservation payment. Payments made to client accounts legally belong to clients until they become legal owner, and can not be used by the company or solicitors for any other purpose.
Under UK Law you become legal owner on the Completion Date. After completion, the property is registered under your name at the Land Registry. Registration takes longer than completion and is normally a few months after completion. All of your funds including the reservation payment remain in the client account until completion. Our companies only recieve the funds and can use them, after you become legal owner – after Purchase Completion.
Following completion, you get a completion summary and then 1 to 2 weeks later, other documents. The property is registered under your name at the UK Land Registry and the Title Documents are obtained showing you as the new owner. We will ensure all documents are sent to you as soon as they become available. You can also check your ownership directly with the Land Registry after registration. The Land Registry maintains an on-line register.
STEP 8. Post Completion & Rent to us
You rent your property to us and we pay you rent. Rent starts 1 month after Completion Date and is paid into the owners own bank account at the end of each calendar quarter (31 March, 30 June, 30 Sept, 31 Dec). If you are buying the DIY2 Deal then you agree to give us a rent-free period in your rental agreement with us until the deal is completed or cancelled. So you do not get rent until later, once house 2 is purchased. Then you start getting rent at the higher property prices for both houses.
Bank Details: We get your bank details (UK or Overseas) on a special form after completion & pay rent at end of each calendar quarter
HMRC Application: If you are resident overseas, we register you with HMRC as non-resident landlord. This registration service is free of charge. We complete the application and send for you to check, amend, sign and return. It may take several months to get the HMRC non-resident landlord (NRL) reference number due to Covid backlogs. If there is delay in getting this, your first rent payment may be delayed until we get the NRL number, but the amount you get will not be affected. After this NRL number is issued, HMRC will also normally issue a UTR number and you will need to do a tax return the followign tax year. You can do this yourself online but we also have an optional tax filing service that can do this on your behalf each year. About 50% of our clients do it themselves each year and rest use our optional tax filing service. If you are buying the DIY2 deal, there is no income tax liability until the deal is completed – as we pay the tax on any rent we keep. So the HMRC application is best delayed until the second house is purchased.
Net Rent System: Under our agreement you rent the property to us as per the commercial agreement to rent and sublet. We are your tenants and agree to pay net rent (5% standard net rent and 1% bonus net rent – total 6% of property price per year) and agree to keep you property in a good condition at our cost. We then sublet to our own tenants and are the Landlord of the property. We do everything. You do nothing, and get passive income for the long term. However, you retain full management control and there are no managing agents.
DIY2 Deal: If you have selected the DIY2 deal, then the agreement gives us a rent-free period until you complete the second house purchase. During this period you have no rent, no costs and pay not tax. After this, the rent starts for both houses at the higher rate of the property prices that are prevalent at the time you complete the purchase of the second property. The DIY2 video also shows how you can continue building your portfolio by setting up a DIY1 deal on either or both of your houses after purchase and thereby continue to build your property portfolio.
STEP 9. Long-Term Rental
Most clients want to keep properties for long term. We are set up to provide services for 20+ years and longer and our clients really like our hassle free service. 70% of our sales each month are linked to our existing clients. However, you do have the option, after the first 3 years, to give us 6 months notice, if you wish, and then the tenant will be moved to one of our nearby properties and the property will be handed back to you in a good rentable condition. After this you can live in your property, rent it out, use any agent or re-sell the property. Thus the agreement continues unless you give notice to cancel. Over the past 15 years, very few clients have given us notice to live in or resell their property, and so far, (as at Oct 2022,) no-one has given us notice to move to another agency. We cannot take back a property once a notice has been given. We have never given any client notice and we do not intend to do so.
Long-term Guaranteed Rent: Net Guaranteed Rent System continues after the 3 years & rents are reviewed at the end of each calendar year after the initial 3 year period. There are many costs in long-term property management and we pay for ALL of these including re-renovations each time the tenants move and upgrades to EPC whenever these are required. The baseline net guaranteed rent is 5% of original property price and is fixed for 3 years and then rises in line with official rent inflation at end of each calendar year (1st of January). However, you also get an extra 1% (so you get 6%) for the first 3 years as our costs are less because the properties are freshly renovated at the beginning. Then for a few months until the end of December it will be at 5% rate before increasing. Each annual increase after the first 3 years will depend on how rents have grown in the market the previous 12 months. For examply, if rents increased by 4% then your rent will increaese by 4%. Overall, considering all the services we provide, this net guaranteed rent system provides better net rent than you would get using normal letting agents over the long-term. We have been using it for over 15 years and our clients really like it.
If you want to buy more properties and grow your portfolio, then it is best to get benefit at 8% of property price via the DIY deals. Your deal discount build-up at 8% of property price whereas the net rent is normally around 6% of property price.
STEP 10. After Purchase Services
UK Will Service: You can decide who will own your property after you. E.g. Children – We provide a free simple UK Will 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 each year if you own a UK investment property.
Open Non-Resident UK Bank Account: We can provide reference letters after property is registered to help you do this. Owning a property in the UK is a valid reason to open a non-resident bank account in order to deposit your rent. However, you may need to go physically to a branch with your ID and documents in order to do this and some branches make it hard for clients. UK bank account is not essential as rent can be sent to any of your overseas bank accounts. With your permission, it can also be paid to a first degree family member. (We will need the ID and bank statement of the family member, prior to any payments).
Future Resale: You can resell easily in the future and we can also buy back at the market price. However, you should NOT buy, if you wish to resell quickly e.g. within 2 or 3 years as you will not make much profit.
VIDEO – 10 STEPS IN THE PROPERTY BUYING PROCESS
This video covers ALL of the practical steps above in details. Please watch it in full as this is the process we will follow. The content in this video is similar to Section 4 of the Main Property Video
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 we no longer sell properties for immediate own use. We sell investment properties only. All of the houses we sell are already rented out to good long-term tenants and must remain so for at least the first 3 years. Even after this, our clients normally continue with the same system. However, you can of course give us notice if you wish, and we can move the tenants to another of our properties after the 3 years. Then you can take possession of your property and use it for your own use.
If you need a property for immediate own use, then our service is not suitable for you (as all of our properties are rented out for at least first 3 years). It is best to use the “open market” and use normal local estate agents in the area you wish to live in. This will enable you to see a wide range of houses in your desired location and enable you to select one that is most suited to your own personal needs.