How landlords can avoid getting caught-up in stamp duty carnage
Landlords looking to expand their portfolios can avoid the chaos caused by residential buyers rushing to the market to avoid stamp duty, by using a few simple tricks, according to Mortgages for Business.
The specialist buy-to-let broker is offering landlords four key pieces of advice to help investors complete purchases in the face of mounting chaos as owner occupiers attempt to make use of the Chancellor’s temporary cut in stamp duty: Be prepared to rethink location; Choose a broker offering a portal; Carefully consider the type of property you are investing in; and Pick the right lender.
Mortgages for Business says if landlords consider all four of these factors, they could get their transactions completed in spite of the chaos affecting the market - as a slick purchase could take just 53 days to complete.
In July 2020, the Chancellor raised the stamp duty threshold to £500,000, from £125,000 in a bid to boost the economy amid the pandemic and stimulate the housing market following the first lockdown. The “stamp duty holiday” has helped drive up the number of transactions to the extent that the extra business has inundated some lenders.
As a result, Mortgages for Business is urging landlords to consider four factors to increase their chances of getting a deal through.
Look at Your Location In A New Light
Mortgages for Business says even lenders still capable of doing deals in sensible timeframes are struggling to get mortgages approved where local authorities are dragging their feet. The slowest local authorities are now taking more than 100 days to undertake property searches, a key element of the conveyancing process, as the surge in transactions coincides with pandemic-related staff shortages. Mortgages for Business highlighted Hackney Borough Council (180 working days), Bedfordshire Council (65 working days), Caerphilly County Borough Council (60), Cambridge City Council (50), and North Warwickshire (50) as the worst performers.
Jeni Browne, director of Mortgages for Business said, “Landlords who just want to get a purchase done are sick of the stamp duty chaos. If you have the option, you should consider the effect that the local authority you are dealing with could have on your purchase. One search we ordered recently took 145 days to complete. If you are considering purchasing a property in Hackney before the turn of the next century, you may want to rethink”.
The Importance of Portals
Data from Mortgages for Business’s landlord portal shows that it takes less time to process applications if they’re done via portals with average deadlines shortening by 20 days, from 73 working days to 53 - cutting down the time it takes to process a transaction by 27 per cent.
Jeni Browne said, “Portals offer clients a space with clear to-do lists, including which documents are required to move the application forward, and the ability to upload all documents quickly and securely, there and then. While this research is based on our data - and the Mortgages for Business Landlord Portal is is working very well - I’m sure we’re not the only broker with a good portal. My advice to landlords looking to take control of their own destiny is to use a specialist buy-to-let broker with portal technology. It is a very simple way to shave a couple of weeks off a buy-to-let property transaction.”
Choose the Right Property
Mortgages for Business says not all property purchases are created equal and that transactions take 11% longer if the property in question is a flat, rather than a semi-detached house.
Jeni Browne said: “Even if you’re not trying to make use of the stamp duty cut, you may well find that your deal gets caught in the crossfire. Picking a semi-detached house, rather than a flat will help smooth the way.”
Choose the Right Lender
The specialist buy-to-let broker also took the opportunity to warn landlords that more than half the BTL lenders who are actively lending at the moment are capable of doing a deal within the usual industry average. Those purchasing vanilla properties can expect an estimated normal eight week completion time.
Jeni Browne said: “Most lenders are still quoting application-to-offer times of about three weeks which doesn’t sound too long. But the reality is that these timeframes are not being met. To get deals down relatively quickly, you need to avoid lenders that are dragging their feet. While we’re not lenders in our own right, we can ensure landlords are using the right lender. Go to the wrong one and you could find yourself dealing with a lender that is taking weeks to respond to enquiries.
This was posted in Bdaily's Members' News section by Raoul Duke .
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