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
Buying Investment Property
The process for the “Best Buy” 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. There is no mortgage lender involved as properties are affordable without expensive and risky borrowing. 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 full payment.
Here are the steps involved:-
1. Discuss your requirements
Give us a call to discuss your requirement. 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
2. Select the Investment Property
This will depend on your budget. If your budget is low, then select the standard 2-bed terraced property.
Please note that within each type of property there are many almost identical units available within a narrow price range depending on rental yield. The slightly more expensive properties have slightly more rental.
If your budget is much larger, you may wish to purchase multiple properties. In such a case it is best to purchase one property first, and go through the purchase process to completion and then purchase additional units. You should be able to provisionally select an investment property on the basis of information on this site and then fine tune and finalize your selection after discussions and property viewing.
3. Provide Ownership and ID information
First you need to decide if property to be purchased is by a single owner or multiple owners. 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 or Joint ownership in case of husband and wife.
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
We will also need to know the source of funding – normally this is from ‘savings’ or ‘business profits’. Prior to exchange of contracts your solicitor will also need to see these documents or if you are not present in UK, we will need attested copies prior to the exchange of contracts. We can help you and guide you in this process so that you can send the right documents to us.
4. Get Information Pack
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.
5. Visit to UK
Most investors will visit the UK – either prior to purchase or after purchase. This will allow us to meet you at our offices and you can view the properties. We can also get your documents attested by a UK solicitor (if not done overseas) as identification is required for exchange of contract, purchase completion and registration under your name at UK Land Registry. We also get documents done to represent you for other steps in the purchase process and property management. If you are not yet visiting the UK, you can still buy but we will need to get your documents (passport, address ID & ID-1 Form) attested by a lawyer in your country to the satisfaction of the UK Land Registry. This can be done easily and we will provide full details.
6. Agree to proceed with a purchase
Once you agree to purchase, you will need to sign the Reservation Agreement and then make a payment of 10% plus purchase costs into the Client Account. This is an important step as the Reservation Agreement outlines the steps we will take in conjunction with your solicitor to ensure Exchange of Contracts, Completion of purchase and Registration of the property under your name at the UK Land Registry. This agreement will also fix the price, specify the agreed guaranteed rent and payment terms. When demand is high, property selection may be in reservation date order and you may need to follow a TWO stage process. First make a reservation of the “type” of property and then, normally a few weeks after reservation, select the specific property prior to purchase completion. Only once you are 100% happy with your selected specific property will we proceed to the next steps.
7. Exchange of Contracts & Completion
We 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. Your rental starts to be credited to you 1 month after your final (90%) payment even if completion is delayed.
8. Registration at Land Registry
Following completion, the property is registered under your name at the UK Land Registry by your solicitor and your solicitor will provide evidence for this after registration. We will ensure all documents are sent to you.
9. Management of Property
We and our partner companies will ensure your property remains rented and we will provide updates and statements to you every 3 months. Your net rent will be paid into an account specified by you. The Net Guaranteed Rent option means that you get the rent even if your property should become vacant or even if your tenant does not pay rent. Net Guaranteed Rent provides additional re-assurance to investors and is popular amongst overseas investors as it gives them certainty of income. You can continue with the Net Guaranteed Rent option even after the first 3 years if you wish and all of our clients normally do this.
10. Resale in the Future
If required, we can help you resell your property or you can use another agent to resell if you wish. We normally advise clients not to purchase if they intend to resell soon e.g. within 2 years, as they will not make much profit due to buying and selling costs. Most of our clients are buying for long term investment but circumstances can change, and they can resell sooner if needed.
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 not any 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 best buy investment properties.