Buy to let comes with a unique set of lending requirements. Brokers need to beware that while every solicitor is regulated to carry out conveyancing, some may lack the skills and experience to do so in complex markets. I take a look at the main differences in this specialist sector.
Buy to lets
You would expect any conveyancer to be familiar with buy-to-let lenders’ conditions and requirements but even mainstream lenders such as TMW or BM Solutions will have extra conditions on their instructions to solicitors.
Lenders vary on their requirements even down to the length of an acceptable Assured Shorthold Tenancy Agreement. For some, 12 months is the maximum term while others are content to accept 36 months.
Care needs to be taken if the agreement allows the tenant to sub-let and if a Tenancy Deposit Scheme is in place, which is by no means as universal as they should be by now. Both are sticking points with many lenders.
On occasion we have had to organise amendments to ASTs to ensure compliance with the lender’s requirements. If the conveyancer is not familiar with dealing with ASTs the matter could end up falling over with consequent delays and recriminations on the part of the buyers about your choice of conveyancer.
Specialist lenders, quite often, attach additional conditions to their loan agreements which pose a greater risk of delay which may put the relationship with your client under strain; something you would wish to avoid.
Lenders will want to ensure that any necessary licences have been obtained by the sellers. Borrowers and conveyancers are expected to report to the lender if they have noticed anything which could risk any revocation of such a licence.
It’s the conveyancer’s responsibility to check that existing licences can be assigned or a new licence will be granted to the buyers.
There is also a need to check with individual councils how they define a HMO which can differ subtly from area to area.
In some parts of the country, but not all, conveyancers will have to consider Selective Licensing requirements and how lenders treat these. Some will require the licence to be in place before completion, others will be happy that the buyer has applied for the licence and paid the requisite fee.
When choosing a a law firm, brokers and clients need to consider whether a run-of-the-mill conveyancer would pick up on requirements such as these.