Archive for June, 2010
Please see a short interview we recently did with Steven Hilton from the National Landlords Association (NLA) – a well established organisation that many readers would already be aware of. We discuss their long history; the benefits / risks of being a landlord in 2010; the concept of the ‘property millionaire’; industry ethics; the scrapping of the landlord registration system; the Local Housing Allowance (LHA) and evictions…
1) For those new to the industry, can you provide a brief explanation of what the National Landlord Organisation (NLA) is and does? Representing landlords from all over the UK, the NLA is the leading organisation for private-residential landlords. It campaigns for the legitimate interests of landlords by seeking to influence decision-makers at all levels of government and by making landlords’ collective voice heard in the media.
The NLA helps landlords make a success of their lettings business by providing a wide range of information, advice and services. It seeks to raise standards in the private-rented sector while aiming to ensure that landlords are aware of their statutory rights and responsibilities.
2) The NLA have been a long established as a central point of call for investment property owners – how has the organisation changed over time? The NLA has changed a great deal over its 37 year history, even our name was changed in 2003 to better reflect the national spread and diversity of our membership.
However, the core values and objectives of the organisation have never changed. The NLA was created (as the Small Landlords Association) in 1973 to campaign for a more equitable legal and business framework for private-landlords and although the sector has been transformed in the time since there is still an important role to be played to ensure that the collective voice of property investors is heard.
3) What are the main benefits of being a landlord in 2010? Rental-property is still be a potentially lucrative investment vehicle. Despite the economic downturn returns have remained relatively stable for the majority and provided that you are prepared, and able, to plan for the long-term prospects have continued to be strong.
4) And, conversely, what are the risks? Investors in residential-property have to bear in mind that bricks and mortar are not like stocks and shares. Property, and more importantly tenancies, require maintenance and commitment. During the course of a tenancy things will go wrong and in all likelihood they will cost time and money so landlords must ensure that they have sufficient contingency funds to cope.
5) Do you believe there is enough information available on the realities of owning investment property? There is a great deal of high quality information available to investors (and potential investors). However, there is also a considerable amount of very poor quality ‘advice’ on offer in the form of ‘get-rich-quick’ schemes and armchair investor workshops. It can be very useful to have the assistance of a reputable landlord association (like the NLA) to act as a filter.
6) Particularly prior to the onset of the credit crunch there was a rise in the presence of unscrupulous landlords - do you believe that there are enough ethics in the industry? Unscrupulous, or rogue landlords as they are often termed, have always existed irrespective of the economic climate. However, immediately prior to the credit crunch we would argue that there was a noticeable rise in ill-prepared property investment. This led to bad practice resulting from ignorance rather than malice so I would suggest that the issue is not an ethical one – but a matter of education and awareness.
7) What can be done to control the presence of such landlords whilst ensuring that those who do operate in an ethical manner do not feel that they are being overburdened with regulation? This is effectively the $1 million question. There are a small number of genuinely unscrupulous operators active in the sector, whom successive governments have attempted to regulate without significant success. The best thing that the sector can do is to continue to drive up standards so that those who fail to offer a decent service are highlighted as unacceptable and driven out of the marketplace.
8)To the relief of many, it was recently announced that impending ‘landlord registration’ system was to be scrapped - do you view this as a positive step or should there perhaps be something in place to protect the rights of good-willed tenants? This announcement was most definitely a positive step as it signals government recognition that the vast majority of landlords offer high quality accommodation.
In the rush to regulate it is often overlooked that there is a significant degree of statutory protection already in place providing an equitable balance between landlords and tenants rights.
9) What are the NLA’s views on the current Local Housing Allowance (LHA) system at present – particularly with regards to the fact that more landlords are becoming reluctant due to the stricter rules that were previously in place (such as rent being paid directly to tenants)? It is highly unfortunate that at a time when more and more tenants are becoming reliant on LHA inadequacies in its administration is making the housing benefit market less appealing to professional landlords. It is essential that the Government restore a tenant’s choice to elect for direct payment of their LHA to the landlord to arrest the growth in arrears and the spread of the stigma which is becoming attached to LHA recipients.
10) It is said that the UK has one of the longest periods it takes to evict a tenant (for example one who is refusing to pay rent) -what are the NLA’s thoughts on this and what could be done to help landlords in this ever-common situation? It is a common misconception that UK landlords are forced to wait considerably longer to regain possession of their properties than their international counterparts. In fact there are a great many countries with far less agreeable housing legislation. Never-the-less it can take an unacceptable length of time to obtain vacant possession due to the often sclerotic nature of the courts system. Ensuring that landlords understand the system and approach proceedings properly prepared is the most straightforward way to expedite matters. A landlord association can help with such preparation for a fraction of the cost of formal legal advice.
11) Finally, how can readers find out more about what you do and become an accredited member? Please see our website at www.landlords.org.uk or call our membership team on 020-7840-8900. Please also feel free to follow us on Twitter and join our Facebook fanpage.
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Posted in Business Management, Local Housing Allowance (LHA) | No Comments »
Please see an interview with Paul Howard – Head of Intermediary Sales – at The Mortgage Works (TMW), one of the UK’s leading buy-to-let lenders. Property investors were recently very interested in hearing that TMW were the only mortgage company in the current marketplace to raise their loan to value ratio to 80 percent. We ask what was their reasoning behind this, particularly as several other prominent lenders have failed to follow suit, as well as looking into their thoughts on the short, medium and long-term; how lender behaviour has / is changing; the new Financial Policy Committee (FPC); the new build phenomenon; Local Housing Allowance lending and more:
1) Can you start by giving a brief history of TMWs’ presence in the UK buy to let market? Sure, the Mortgage Works actually began as the Sun Bank which was a subsidiary of Sun Life Canada (an insurance company). In the mid 1990s, the company started lending in what was then termed as ‘residential investments’ (the term ‘buy-to-let’ was pretty much non-existent at that time). The company was subsequently acquired by the Portman Building Society and, in 2002, the name was changed to The Mortgage Works. In 2007, Portman merged with the Nationwide and the company has been a subsidiary ever since. Today, we are one of the two largest buy-to-let lenders in the UK (the other being Birmingham Midshires) and are very comfortable in the market place.
2) Many investors were excited to hear that you were the first to offer 80 percent loan to value with a competitive pay rate after an extended period of buy to lenders taking a stricter attitude – what was the rationale behind this and, perhaps more importantly for our readers, is it a sign of things to come? The move to 80 percent loan to value was essentially a direct reflection of how our buy to let lending portfolio has performed throughout the recession. As a company, we are proud to say that we have historically been prudent lenders and, as a result, coped well in what has been the worst economic downturn since the 1930s. Additionally, the recent changes in the market place also influenced our decision to decrease down-payment requirements. When compared to a year ago, the housing market on a general level has seen some improvements – for example, the drops we witnessed in 2008 and 2009 are in no way as severe as they are today. Additionally, we are of course witnessing a very low bank base rate which has helped manage affordability and kept our delinquency levels low. So, overall, our business model has remained successful and, consequently, we like buy-to-let and want to increase our presence. In answer to the second part of your question, I would very much doubt we would be increasing it for a while as we appreciate that – whilst the market is improving – things remain very fragile, particularly from a broader economic perspective.
3) Generally are you lot more confident about the buy-to-let market now? Absolutely, and I think buy-to-let investors should be too. The main reasons are that properties are much cheaper and are offering more solid returns than what was perhaps becoming the case in the build up to the credit crunch. For those that already own buy-to-let property, most have seen an improvement in their equity position in the last year and many (such as those on trackers and variable rates) have benefitted from very low mortgage payments. Furthermore, bringing in factors such as an increase in the amount of people looking to rent as well as lack of supply of housing in the UK – we feel it is certainly an advantage to be in the industry.
4) As the UK enters into a slow recovery period – what do you think will happen in the short/medium term buy-to-let market? Yes, the economy still remains in a relatively vulnerable position and our view is that we will remain in a low rate environment for some time to come (even they do start to rise I think it would be at a slow pace). However, we also expect to see a continued level of subdued lending. The Council of Mortgage Lenders’ (CML) forecast on the total market size is at £150 billion for this year; last year it was £142 billion, representing a very negligible rise. Indeed, nobody within the industry is suggesting that next year is going to be any different. So I believe that buy-let-investors should be expected to see very slow to modest growth due to the fact that banks these days are ever concerned about their own ability to borrow from the money markets and many are also facing securitization issues. The level of growth that the buy to let industry will witness in the medium term will depend on the willingness of more lenders to come back into the marketplace – at the moment many have the scourge of the recent past weighing over them and view buy-to-let as risky. It should also be noted that most of what is being said here applies to the overall market and not just buy to let.
5) Continuing on this point and looking back to the onset of the credit crunch a few years ago – do you think, on a general level, that buy to let was taken far too lightly by lenders in general? I would not say in general, more by some. I think that many practices that were undertaken are now clearly viewed as a mistake which has resulted in more usage of the word ‘toxic’ to describe them – which is a great shame as our experience of them has been everything but toxic. One example would be the ‘day-one’ remortgage: a process where investors were able to effectively pull out their initial down payment, often with extra cash to spare in a very short space of time – whilst many were able to build their portfolio quickly using this method, when the market changed it meant that banks were exposed due to having large portfolios of clients with very little/no equity. Another example would be lending to so-called ‘property clubs’, who largely focused on pooling investors funds together to buy over-valued stock only for the market to crash, leaving enormous debt positions and very unfortunate consequences.
6) And going on from that, how has TMW’s underwriting procedure changed since the credit crunch? I don’t think the procedure has changed hugely – as I mentioned above, we have always been relatively careful lenders but it would be fair to say that apart from stricter loan-to-value ratios we are also requiring higher payment calculations as well as placing a particular importance on any applicants credit rating (the criteria of which has also increased slightly and which also applies to existing customers). Overall, however, we are using the same processes as before with buy-to-let: a professional surveyor will inform what the open market value and realistic medium-long term rental figure is for a property which will enable us to determine the viability of providing the loan – a fairly robust practice followed by most lenders which I would not imagine to change for some time.
7) We wanted to get your thoughts on the recent inception of the Financial Policy Committee (FPC) in relation to the future of the buy to let industry? It’s probably too early to tell but the new body certainly intends to regulate the buy to let market which will certainly affect the way lending procedures are managed across the board – this is going to be a challenge for both lenders and landlords. For us at TMW, however, such regulation is unlikely to make that much of a difference as we already treat buy to let mortgage / further advance / remortgage and other secured lending applications in exactly the same way as we do with regulated prime applications. Any mortgage application made through the Nationwide is already subject to the necessary controls of the FSA so we would need to adapt according to the new regulations – yet we do not envisage this as being a significant overhaul of our existing practices.
8)You mentioned new-build property clubs before – the property investment community has, in recent times, noticed a large amount of this stock come back on to the market place – perhaps more realistically priced in light of the market changes. What are TMWs thoughts on lending on these types of property? We have, for some time, had some concerns about new build apartment blocks in particular – in fact, we stopped lending on them back in December 2004 (although we do lend on new build houses). As I mentioned above, our reasoning for this was the glut of over-priced properties combined with several unscrupulous investment clubs effectively playing the mortgage system – another reason which eventually fuelled the collapse of the market. Whilst you are right that this position is passing now, I still don’t think we are at the stage where we are comfortable to lend on them as yet. I think the majority of buy-to-let lenders would concur due to the fact that it was not too long ago that eye-wateringly large sums of money were lost as a result of going too heavily into this market. Another concern that is readily apparent is the fact that it remains very difficult, from a surveying perspective, to truly value new build properties due to, firstly, a lack of comparable sold data due to the current low activity in local market places and, secondly, the issue of many developers releasing their stock in batches – thereby changing the valuation dynamics (something that has, for a long time, effected the way we view this type stock). Readers who are still interested in buying new build should not that there are lenders out there who will work with new-builds, but it is highly likely they would offer a product with a low loan to value and undertake fine-toothed due diligence to ensure that their interest in the asset is protected.
9) What are your views on landlords who house Local Housing Allowance (LHA) tenants? We have no issues with lending to landlords who let to LHA tenants – our position is focused around the property owners ability to maintain the loan and the fact that he/she would have carried out appropriate due diligence upon application (which we would obviously verify during our underwriting procedure). We will undertake the necessary checks on the landlord and NOT the tenant as it will always be the former who will be looked into if things go wrong (which, in reality, they rarely do). This is the approach we have adopted for the last 2 years and seems to be working very well.
10) What would be your advice to property investors and landlords to best prepare themselves to obtain a buy to let mortgage? The importance of keeping a spotless credit record cannot be understated, as the merest glitch at the moment can sabotage your entire application (this goes for any buy-to-let application, not just with TMW). As important is to undertake detailed due diligence – focus on the area (schools, hospitals, shops, banks, chemists and other local amenities); the specific location; demand / supply; what tenants you are likely to house; earnings; yield comparables; crime statistics; transport links to name a few. One of the many advantages of the modern times we live in is that most of this information is readily available for free!
11) Lastly, what about remortgaging? Would you adopt a similar lending policy to how you would a purchase mortgage? Our lending principles with regards to re-mortgaging remain broadly in line with house purchases – the process does often tend to move quicker due to most of the information we need already being in place (such as Assured Shorthold Tenancy agreements and other relevant documentation pertaining to the property). At the moment, we are seeing that many existing investment property owners are not needing / wishing to re-mortgage so as to maintain the favorable terms they are currently receiving as a result of the low bank base rate. The fact that it is not financially in their interest to remortgage has had an effect on this side of the market for us – but we expect this to gradually change over time.
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Posted in Due Diligence, Finance, Local Housing Allowance (LHA), New Build Property, Tips for Property Investing | 1 Comment »
Please see an interview with Ben Hughes and George Nartey from Social Housing Expert: both are landlords who have built their portfolios using in tenants receipt Local Housing Allowance (LHA, formerly known as ‘housing benefit’). Whilst social housing letting continues to receive criticism; largely due to changes in legislation with regards to the LHA; Ben and George explain their own thoughts on the matter as well as how to minimise risks; portfolio management; lenders views and using lease options with social housing tenants amongst other topics.
1) Why do you think social housing has an important role to play in post credit-crunch Britain? The credit crunch has created challenges for all buyers in the UK housing market, not just investors. Unable to raise funds to buy, many are seeking rental solutions and sometimes even social housing so much so that the demand in key areas has now hit 1.8million households (Source: Communities & Local Government) and the private rented sector is an essential part of the solution. This opens up huge opportunities for investors. Our experience demonstrates that a well-informed and effectively-executed social housing strategy can give post credit-crunch investors a significant advantage.
2) Why did you personally choose to go down this route? We assessed the various investment options available and decided that a social housing strategy offered the most compelling benefits. Rents are very attractive, some Local Authorities and Housing Associations will lease your properties for 3 to 5 years and guarantee your rent and they will even manage your property for you as part of the deal. As our primary focus is ‘income’, social housing is an obvious choice. This sector is recession proof – if you know what you are doing.
3) As you mention above, many investors would know that Local Housing Allowance (LHA) rental payments have a tendency to be more attractive than market rents – what other benefits does social housing offer as an investment strategy present? Whilst the Local Housing Allowance (LHA) is not always guaranteed to offer higher than open market rents, with careful research you can find areas where it is significantly greater. In addition to this, voids are very few as tenancies tend to last much longer than professional or corporate lets (Source: Rugg’s Review). Additionally longer tenancies mean costs incurred in refurbishing and upgrading furniture to re-let and in re-letting fees are significantly reduced. Combination of the above means significantly improved profitability for landlords who run an effective operation.
4) There are many investors who would be reading this who would have a level of skeptisism with regards to housing social tenants (examples include damage to properties, defaulting tenants etc) – what steps can be take to minimise risks? The myths abound! Our experience is that social housing tenants are no worse than professional tenants. Most are very appreciative of the opportunity to live in a well-maintained home and will work well with you if given a chance. Informed investors seeking tenants – professional or social, should take the correct steps to get a good tenant (credit checking, vetting, regular checks etc.). Over the years we have perfected a system that minimises the risk and maximises profitability. For example, we have tenancies that have continued un-broken for over 6 years and rents are paid regularly and on time. The tenants are house proud and look after the homes very well. In short, effective management is the key in all cases. We run courses where relevant techniques are taught.
5) Would the social housing strategy only work in certain parts of the country? What about in London and the South East, where house prices can be significantly higher? A social housing strategy – like renting to any other groups can work well anywhere in the country and there is no substitute for careful research against clear criteria. Our experience of London and the South-East is that if the deal stacks up and you buy the right property at the right price, it will work well.
6) What about new build properties – we are currently seeing many appearing on the market at very solid discounts, do these represent a good opportunity for LHA tenants? We do not see why not – if the sums stack up. Our own strategy is built around older properties because of the added opportunities these properties give us.
7) Do lenders act differently to landlords who house social / LHA tenants? Unfortunately no – not all lenders accept social housing tenants. If you are going to use this strategy then you have to let your broker know so that they source your finance from lenders who do accept social housing tenants. There are a number of them around and this should grow as the secured lending market improves in time.
8)Do you think its important to have a mix of social and non-social housing tenants in one’s portfolio? Absolutely! Diversification makes excellent business sense. In our case, whilst we predominantly go for social housing opportunities, all our property would sit perfectly well in a portfolio aimed at professional tenants. Our exit strategies always include possible renting to professionals or sale to owner-occupiers.
9) An increasing amount of investors are using sandwich lease options to gain profits from a property – can a tenant buyer claim LHA and still have a right to future ownership of a property? Are there any other ways lease options can be incorporated into a social housing portfolio building strategy? Provided the tenant buyer qualifies for LHA, we do not see why not. The precise circumstances of the tenant buyer and the deal are what matter, so we believe a social housing strategy can be linked into a Lease Options scenario – but each circumstance would have to be analysed specifically.
10) How can readers find out more about what you do and can you outline some information about the courses you offer? Our company (Social Housing Expert Limited) runs courses for Investors. We believe well informed investors will make the most money. Our Social Housing Fundamentals course covers the following areas:-
- A brief review of Social Housing;
- Maximising rents by working with Housing Benefits clients;
- Guaranteed Rent Schemes;
- Minimising voids by leasing your property on 3-5 year schemes;
- Buying the right property using careful investment criteria;
- Accessing Grants and Incentives;
- Action to successfully address Issues and Challenges;
- Case studies and Action Plan
For more information and for course booking details, please visit our website:- www.socialhousingexpert.com
Also see our guide on the Local Housing Allowance which goes into the topic in detail (note you will have to be a member of the Property Investor Hub which can be done quickly and easily here).
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Posted in Due Diligence, New Build Property, Tips for Property Investing | No Comments »
Please click on the link above to access this months statistics, news and information for the property investor (you will have to be a member of the Property Investor Hub which can be done in under a minute by clicking here).
This months statistics illustrate that most of the indices are reporting to a year-on-year rise in house prices, including the Land Registry (the Halifax reported a slight drop in the month). There is also more confidence from RICS surveyors reporting a rise in house prices (and less reporting falls). Whilst the number of mortgage approvals slightly declined, the 3 month LIBOR has decreased by 0.13 percentage points which could mean some promising news for the mortgage market (Money Supermarket statistics have shown that the number of mortgage products available on the market had surpassed the 3,000 mark for the first time since July 2009).
However, the CPI has increased by almost 1 percent (to reach an eighteen year high) and the RPI has increased by 0.3 percent – the Bank of England has stated that this sharp rise will be temporary, yet some experts are beginning to lose faith in the governments’ willingness to keep prices under control. Eleven of the 25 city economists surveyed by the Telegraph believed inflation was a bigger worry than deflation over the next five-years; nine said that deflation remained the primary concern; while five other economists said that they either believed there would be a combination of both, or that the two would even each other out (click here to view an article via the Telegraph discussing the inflation/deflation debate).
The number of people seeking advice from the Citizens Advice Bureau has increased marginally; unemployment has increased slightly (with 757,000 people being unemployed for 12 months or more) and the average household debt has also decreased marginally. The daily increase in government national debt fell, on average, by £26.6 million and repossessions were also down. Total secured lending continued to increase at a slightly faster pace than the month previous whilst consumer credit decreased marginally – however it was reported at the start of June that the number of new credit cards coming on the market had risen.
Tags: auction property market, auction property statistics, bank base rate, bbr, credit, debt levels, house prices, inflation, latest buy to let mortgages, may 2010 property investor, Mervyn King, Monetary Policy Committee, mortgage approvals, Property Investor Factsheet, repossessions, unemployment UK
Posted in Economics for the Property Investor, Finance | No Comments »
Please see an interview with Caroline McDonnell, a lawyer based in Barnsley that we have had the pleasure of working with for some years now. As many investors appreciate the fact that a fast completion is essential to securing a deal, we have focused this interview on how to maximise the ability to benefit from a quick yet, more importantly, safe property transfer.
1) Can you give our readers an outline of your experience as property lawyer? I am qualified lawyer with over 18 years experience in dealing with all aspects of residential and commercial property transactions (and other law) and I have a large client base of buy to let investors with portfolios from 2-100 properties and have assisted clients who are starting out in the investor market or are building their portfolios. The majority have been clients of mine for more than 8 years.
2) From a legal perspective, what are the preliminary steps that a property investor can take to ensure a smooth property transaction? In order for a property investor to enable a smooth property transaction, they need to choose an experienced lawyer who knows how a property investor thinks and understands the promises which they make to the sellers to “secure” the deal. I would also advise that the seller chooses their solicitor wisely to ensure that they understand the needs of the seller and work proactively. I would recommend that an investor is open and honest with the seller as to how the transaction is to proceed and what they can expect.
3) Can you outline the essential searches that need to be done on a property and why an investor should ensure that they are all in place? Since 20th June 2010 the Government decided to abolish Home Information Packs with immediate effect and therefore any new properties advertised for sale will not come with the benefit of a HIP – only an Energy Performance Certificate. There will still be a huge amount of properties out there that have the benefit of a HIP and it depends on the the searches contained therein as to whether they can be used. If the searches are over six months old (but under 12 months old) then validity insurance can be put in place. If the searches are over 12 months old then new searches will need to be carried out. If the sale is a private sale and not advertised on the open market then there will be no HIP available. The minimum which I recommend to any client is that a local search is carried out but we also advise that a drainage search is carried out, particularly to check whether there are any public sewers within the boundaries of the property to ensure that these are not built over. Depending on the area which the property is located, we also recommend that a mining search and/or a brine search is carried out. We do not carry out environmental searches as a matter of course and only do so upon the clients specific request. The client needs to give careful consideration as to whether or not there is any likelihood that the land the subject of the purchase might at some stage in the past have been contaminated e.g. if the property was on the site of an old gas works, tannery or forms part of a former industrial or landfill site. The current regime in dealing with contamination is extremely onerous on an owner of property. Searches can however be undertaken to check whether there is any possibility of contamination which would then be forwarded to the clients surveyor or valuer for his comments. We will not however carry out such searches, we are solicitors and not surveyors and are therefore unable to advise as to whether there is any potential risk and it is for this reason that we would propose sending the results of such searches to your surveyor or valuer. We do not carry out chancel check searches as a matter of course and only do so upon the clients specific request. The client will therefore need to give careful consideration as to whether or not the property which they are purchasing is near a church, or is on land formerly owned by some of the older universities, there may be an obligation to contribute towards repairs to the chancel of the local parish church. This was laid down in the Chancel Repairs Act 1932. Such liability is enforceable in the County Court, and can apply to properties falling within a Church of England parish which has a vicar or a vicarage and has a church dating from the medieval period or earlier. However this may only reveal a potential liability which will not be specific to the property only the area itself. If the search reveals a potential liability then we would ask the sellers solicitors to put in force and pay for an indemnity policy to protect you. However, they may refuse if this is only a potential liability. If this is the case then you the client will need to consider whether they would like to pay for this policy themselves. We will make no enquiries in relation to the potential liability unless the client formerly request us to carry out a chancel check search.
If the client is a cash purchaser, then the choice of searches is down to them. If however they purchase a property with the benefit of a mortgage then the lender normally requires a minimum of a local and mining searches to be carried out.
4) Should any of the above searches come up with problems, are issues easily resovable and, if so, how? In all of my years of experience, I have never encountered a problem on the searches which cannot be resolved. It is down to experience of the lawyer acting for the client as to how quickly these issues can be resolved and how they are dealt with. There are issues which do arise which need to be dealt with but these can be resolved by further research, searches and enquiries. Indemnity polices are used in some circumstances which can be put in force quickly.
5) Why is it always a good idea to work with a solicitor that specialises in working with property investors as opposed to a ‘high street’ one? Many investors believe that in order to receive the level of service they expect they should go to a large firm of lawyers who state that they “specialise” in buy to let investor work. This is not always the case as, from my experience, they charge over and above what a normal buyer would pay in legal fees. I would, nevertheless, always recommend an investor chooses a solicitor who is experienced in buy to let work as opposed to a “high street” one. However some high street solicitors do have specialist teams working for investors. The legal fees which I charge to investors are, the majority of the time, cheaper than the average “one of purchaser” because of the continuous instructions, even if they are only buy 2 properties a year as this builds the client relationship. I do not see why investors should be charged higher legal fees because it is classed as a “specialist market”. When you work with an investor you know what their requirements are, what they promise to the sellers and what expectations they have of their Lawyer. I build personal relationships with our clients that are long lasting, and the investors feel that they can call on your advice and assistance, even if we are not formerly instructed on a specific matter. I have turned around cash purchasers within 3 days of receiving contract papers. If an investor is using a mortgage to aid the purchase then, as long as the mortgage offer is available quickly, within a couple of weeks of instruction.
6) Many investors are often working against the clock to ensure completion – what can be done to speed if the process, if anything? Working with a good solicitor acting for a seller is a must. If they can deal with the issuing of contract documentation quickly and turn around any replies to enquiries then this assists with a speedy completion. Working with a mortgage lender who is prompt at arranging a Valuation and going to offer is the sticking point. Normally it is the mortgage offer which will hold up completion. If any issues arise, then the use of indemnity policies can be used i.e if the searches are not back then we can use search delay insurance to cover this.
7) How are you finding working with lenders at the moment – are they doing extra checks than they used to? It is getting better! They are better than they were a year ago. From my experience they are doing extra checks i.e they are wanting proof of deposit from the mortgage broker and are still down valuing properties, but they are a little less strict then they were throughout the credit crunch.
Caroline McDonnell is a lawyer at Milners Law based in Barnsley and can be contacted during normal office hours on 01226-383587.
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