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This month, I want to discuss how you can streamline your house-buying process to address the lengthy delays. We are experiencing delays from valuers, lenders, and solicitors as they cope with the ever-increasing business volumes. Here are my top tips to help you navigate the process more efficiently.

Check your planning

We have seen many properties recently where the planning hasn’t been correct, particularly with large HMOs or small ones within Article 4. It’s so important to know that lenders will check this, and without the correct planning in place it is potentially unmortgageable. Planning is based on occupants, not rooms… ie 5 rooms and 7 occupants requires Sui Generis planning. There are instances where we can use title insurance, but if the valuer spots that there isn’t planning this stops us using that. We’re not in control of what the valuer says unfortunately! Also, the licensing and planning departments do not communicate, so don’t assume that having a licence means you have or don’t need planning. I would always suggest resolving any issues prior to purchase, so that you are not the one taking the risk.

Land registry 

Land Registry is a great source of information before you purchase a property, and I don’t think that investors use it to its full potential. It will show you any restrictions that are currently in place for the property, as well as any leases registered. Knowing this early on can prevent any issues later down the line – usually when we are in a rush to complete and are then delayed waiting for it to be resolved. 

We are also seeing many issues when we come to refinance, where things have been missed at Land Registry on the purchase.  Bridging companies and cash sales will have different tolerances for what is on Land Registry, and usually any issues like an old restriction would be removed on purchase to make the refinance easier.  Unfortunately, this does not always happen!  As the new owner, it is important that you check the details when you receive the new Office Copies to ensure it has been carried out correctly.  Leaving this to a solicitor means it is dealt with far too late and can cause you some significant delays if we need to update anything at that point.  

For example, an equitable charge from 2012 was never removed on a purchase completion – it has held up the case by 2 months on the refinance.

I feel that this can have similar issues to Companies House, in that investors assume that because someone else is looking after it that the don’t need to take an interest.  It is so important to make the time to understand these things though; names must be the same as passports!

Deposit funds 

This seems to be a reoccurring drama! Not only for purchases either, as lenders are wanting more information and evidence for the original source of funds for refinances. Particularly where the property has been refurbished or converted recently. They can also go back quite a few years as well.

So my suggestion is to make your trail of funds as simple to explain as possible. Keep all documents such as completion statements from refinances or sales of property. Don’t move money unnecessarily, so it’s simple as it can be to show where money has come from. This goes for investor funds too, we are likely to need to seek the source and trail of funds from the investor so prepare them for this, including their ID and bank statements showing the transfer of funds. I would check the source of funds and if this from abroad or anywhere that is unusual then check with your broker before you commit. Lenders have different appetites for where funds come from, and this is so important to know before you start. 

 Finally, be careful about where you are getting information from 

 There have been plenty of examples of leases that we can’t work with, company structures that just don’t work and clients looking to take on projects that they don’t have the experience to support.  A good broker will be honest with you, so find someone you trust and take on board what they are saying.  Generally, brokers (like me!) want to do business, so if we are saying it can’t be done it generally can’t be – I will caveat this by saying you need to speak to people who have experience in what you are looking to do, there are plenty of brokers and solicitors who aren’t experienced in this area and that can make all the difference.  Using places like the HMO Roadmap, where you have access to good quality information will help you in your property journey too; but it is important to speak with accountants and solicitors for concrete advice, as ‘opinions’ can be varied and not always reliable.  Be wary of people trying to sell you a dream without backing it up.  

As always, if you would like to discuss your next deal, you can book in a call with me through The HMO Roadmap here.

About the Author:

Ellie Broadhurst is a specialist mortgage broker working at Baya Financial in partnership with The HMO Roadmap. She works with HMO property investors throughout their journey, from clients starting on their first project through to experienced portfolio landlords and developers. Learn more about Ellie here.