Diary of a Buy to Let Purchase Part 12 – Stuck with the Mini… for now

Well, what do you know? Patient purchasers finish last and high maintenance divas don’t pay stamp duty surcharges.

After my epic dummy-spitting hissy fit last week where I threatened to pull out of the purchase on Monday if the vendor’s solicitor hadn’t made contact, AMAZINGLY on that very Monday my solicitor received the information back from the vendor’s legal people.

So where are we now?

My solicitor received this information and has gone straight back to the vendor’s solicitor with further queries.

A week has gone by and… Nothing!

I can’t begin to explain how boring this is. My solicitor is very good at showing me what’s going on, and copies me in on the emails to the vendor’s solicitor.

So I know what is being asked and I can assure you, it’s nothing unreasonable.

For example, it turns out that there is some planned work for the roof of the building.

My solicitor has asked three times now, whether the sinking fund has sufficient capital to pay for this or whether the leaseholders would need to contribute.

One would surely expect to be asked this question as, let’s face it, no one wants to buy a property and a couple of months later be sent a bill for thousands of quid for a new roof.

But no, this information appears to allude us still. The saga continues, another week has gone by and still I am drumming my fingers.

The other little surprise was that as part of my mortgage T&Cs, I have to obtain independent legal advice as I will be giving an unsupported personal guarantee (PG) for the mortgage.

The personal guarantee is a pre-requisite for Ltd Company buy to let mortgages. This is to safeguard the lender in the event of repossession.

Essentially, if my company doesn’t pay the mortgage, and the property gets repossessed and sold on and there is not sufficient capital to pay off the lender, then I would be liable for any shortfall. This would be the same if I purchased in my own name.

However, because I am offering this guarantee to a third party (i.e. the company), the lender requires that a solicitor talks me through the possible risks and implications should the worst happen.

Now whilst this may sound a little crazy, it’s actually very important. Not all people understand the implications of the PG, and there have been cases where people have signed these documents without understanding the risks to them.

Bad news for these people when they get clobbered in a repossession, even worse news for the lender when the court finds that these people didn’t understand what they had signed and the debt becomes unenforceable.

So in principle, I agree that independent legal advice is a good idea. Until I found out that it would cost me nearly £600.

Now these are costs that have been quoted by local firms – interestingly in Sevenoaks (despite being 25 miles outside of London) the local law firms think that most of their clients work in the City and thus charge accordingly.

So, Paragon (my lender) has very kindly been looking into how much other firms around the country charge and so far the lowest quote is £250- much better.

I haven’t actually done this yet – I am not willing to throw any more money at this purchase until I see some real traction, but I know I need to get this done. It’s also worth adding that not all lenders require borrowers to independent legal advice in these cases.

So in short, another week passes, I haven’t ditched the purchase (yet) but we are not really any further on and I am around £300 down on fees.

The love affair with being a landlord is well and truly over.


Diary of a Buy to Let Purchase

2.12.2015 Part 1 It was that or a Range Rover

4.12.2015 Part 2 I've made £800 already and I haven't got the mortgage yet

7.12.2015 Part 3 The demise of Nathaniel Pig

8.12.2015 Part 4 Call off the dogs...

11.12.2015 Part 5 @***** bank account

17.12.2015 Part 6 Business bank account interview or Center Parcs?

21.12.2015 Part 7 Reality bites...

29.12.2015 Part 8 - The method behind the madness

12.01.2016 Part 9 - Join me in a buy to let fist pump?

25.01.2016 Part 10 - The silence is deafening

16.02.2016 Part 11 - Throwing toys out of prams

23.02.2016 Part 12 - Stuck with the Mini... for now

3.03.2016 Part 13 - Time is running out

14.03.2016 Part 14 - The end of my sad little tale...

30.03.2016 Part 15 - Just call me Peggy

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