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
Follow Jeni as she recounts her experiences of becoming a buy to let investor for the first time.
You might also be interested in:
27.07.2015 Buy to let - from personal to limited company ownership
Prior to now, when asked by clients whether buy to let properties should be bought in their own names or whether they should use a limited company we have always said “it all depends”. Well the Summer Budget 2015 has altered everything and whilst the answer is still “it all depends”, the balance has shifted markedly in favour of limited companies.
9.12.2015 Borrowing through a newly set up Limited Company
Jeni answers one of the questions we are asked regularly at the moment – Can I borrow through a newly set up limited company?
11.11.2015 Setting up an SPV Limited Company
Buy to let lenders which offer mortgages to limited companies usually require the limited company to be an SPV (Special Purpose Vehicle). Jeni explains what one is and how to get one.
26.11.2015 George hits buy to lets with 3% stamp duty surcharge
David Whittaker, MD at Mortgages for Business looks at the effects of the 3% stamp duty surcharge on buy to let properties and the restrictions of mortgage interest relief on landlords' portfolios. In essence his advice is to act now and not to wait until the new year.
Make sure you don't miss any news!
>> Sign up to our weekly newsletter