What is buy to let?

Buy to let refers to the purchase of a property for the specific purpose of renting it out.

Whether you’re completely new to the world of letting or an experienced landlord, it can be complicated to arrange a buy to let purchase and mortgage.

With a quarter of households in the UK expected to be renting privately by the end of 2021 (PDF), buy to let can be a real investment opportunity. A stable income from monthly rent payments can be extremely appealing, making buy to let a continually popular investment.

However, risks do exist, as do potential legal issues. You need to ensure you’ve completed all the proper procedures and paperwork before you can officially become a landlord.

At First4Lawyers, we can provide you with the expert help and advice of highly experienced buy to let solicitors to tackle any legal hurdles around your investment.

What are the legal requirements of buy to let?

As with buying a property you intend to live in, once the seller accepts your offer, you will need a solicitor to act on your behalf throughout the buy to let conveyancing process. They will make sure all the legal matters around taking ownership of a house are taken care of. It is highly advisable to choose specialist property solicitors to represent you during this potentially complicated process.

There are a number of certifications and regulations you will need to obtain and meet to ensure you have in place before you can rent out your property. They include:

• Gas safety certificate
• Electrical safety certificate
• Energy performance certificate
• Landlord’s insurance
• Meeting fire safety requirements for furniture and furnishings (if present)
• Obtaining a House in Multiple Occupation licence (if necessary)

What should I do if I already own a property I want to let?

If you already own a property and are thinking about letting it, you’ll need to consider several factors:

• If you have a leasehold property, where you only own the property for a set number of years, you must make sure that your lease allows you to rent it out. If it doesn't, you may first have to obtain permission from the freeholder.
• Do you have an existing mortgage on the property? If so, you must seek the permission from your current mortgage provider to rent out your property and receive this consent in writing before you let it.
• You’ll have to draw up a tenancy agreement in writing. Assured Shorthold Tenancies are the most common type, but your circumstances may require unusual clauses that you’ll need the help of a solicitor to draw up.
• Be aware that you may have to pay income tax on rent and capital gains tax if and when you sell your property.

What should I think about as a potential buy to let investor?

• Do the sums

You’ll need to know your numbers. Take some time to sit down and work out how much properties cost in the areas you’re considering and what you can realistically charge tenants. Asking for too much will likely result in prospective tenants being put off.

• Research the area

Know what the best areas for your potential tenants are. Think about regions with a great deal of demand for housing, such as university towns. Look at areas with good transport links, schools and other features tenants look for.

• Choose the right buy to let solicitor

With so many rules to adhere to, knowing you have the most knowledgeable legal representation will be a weight off your mind. A specialist buy to let solicitor will make sure your purchase is done properly and smoothly.

• Get the best mortgage deal

Shop around for the most attractive mortgage rate. If you’re paying less in mortgage repayments, you can keep your rent at competitive rates and see more profit. Don’t just go straight to your bank for a mortgage.

• Know the risks

Make sure you know what the possible risks are with buy to let. If house prices, and therefore rental prices, fall you could be left with a mortgage you can’t repay. This could then lead to repossession. You’ll also need to think about the property sitting empty or major repairs being needed – which will both cost you money.

I want to get into the buy to let market – what should I do?

The first step you should take is to instruct a solicitor who understands the law around buy to let. They’ll be able to deal with any of the required actions to secure your mortgage offer, as well as the conveyancing process.

You will also need legal assistance when drawing up tenancy agreements and obtaining permission from your mortgage lender or the freeholder to let the property.

First4Lawyers can put you in touch with specialist buy to let property solicitors, who will help manage the process.

Call us today or click here to start your enquiry and we’ll be in touch at a suitable time for you.