Remortgaging a Buy to Let property - what happens after the offer is issued?
Our guide 'I've got my mortgage offer, what happens next?' explains the next steps and the role of your conveyancer.
If you’re remortgaging a property that you let out, rather than your main home, there’s some additional information your conveyancer will need you to provide as part of the legal process.
Before your remortgage completes, the lender will need to see evidence that you’ve fulfilled your responsibilities as a landlord and that you’ve complied with all relevant tenancy regulations and guidance.
Information your conveyancer will ask forThere are several bits of paperwork you’ll need to gather together for your conveyancer when remortgaging. These include:
• A copy of your tenancy agreementThis must meet current standards, providing information such as your and your tenant’s names, the address of the property which is being let, the date when the tenancy started and when it’s due to finish. It should also include how much rent you’re charging and how it’s paid, any tenant or landlord obligations, and which bills tenants are liable for.
• An Energy Performance Certificate (EPC) Your conveyancer will need to see a copy of the property’s EPC, which is a document that shows how energy efficient the property you let out is. Bear in mind it’s unlawful to let out a newly bought rental property which doesn’t conform to the Minimum Energy Efficiency Standard (MEES). Only homes which have an EPC rating of E or above meet this standard. Find out more about how EPCs work in our guide What is an energy performance certificate?
• An HMO licence if relevantIf your property is let out as a ‘house of multiple occupation’ (HMO), you’ll need to produce a copy of your HMO licence, or confirmation from your council that planning has been granted for you to let your property on this basis.
• Copy of buildings insurance policy
Buildings insurance is compulsory when you take out a mortgage, so your lender will need to see a copy of the buildings cover for the property you rent out.
The information your conveyancer needs to complete the legal work associated with your remortgage can all be provided by you - the landlord, so although it involves getting together more paperwork, it shouldn’t make the remortgage process much longer than for a residential remortgage.
It typically takes around four weeks from the date you received your mortgage offer for a Buy to Let freehold remortgage to complete.
Buy to Let leasehold remortgages
If the property you let out is a leasehold property it can take a bit longer to remortgage, typically around six weeks from your mortgage offer date, as extra information will be required by your conveyancer.
This includes details of any ground rent and service charges, any expected increases in these costs, and whether there are any disputes between the freeholder and leaseholder. If there are any issues, try to resolve these before you start the remortgage process, otherwise they could hold things up.
Your conveyancer will also need to see a copy of the buildings insurance policy for the property. The freeholder of the property or the managing agent should send you a copy of this every year, but if you don’t have one then you or your conveyancer will need to request a copy.
Limited company Buy to Let remortgagesIf the Buy to Let property you’re remortgaging is held in a limited company it can involve an extra layer of complexity and may involve higher costs.
Some lenders, for example, still ask for separate representation, appointing their own conveyancers to check the work completed by the legal firm appointed by the landlord.
Information lenders will want to check during the remortgage process includes:
• The company articles and powersThese set out and regulate the internal affairs of the company such as the issue and transfer of shares, and the duties and obligations of the directors. They are subject to relevant provisions of the Companies Acts.
• Proof that limited company directors have taken independent legal advice.Company directors are often required to personally guarantee any mortgage they take out, so it’s vital that they seek legal advice first to fully understand the implications of doing this, and any potential liabilities they could face. This advice can cost between £300 and £500 plus VAT, and they will need to sort this out locally as any guarantee must be witnessed by a conveyancer.
Bear in mind that a remortgage conveyancer will also charge more for the conveyancing of limited company Buy to Let properties, typically around £250 plus VAT in addition to their normal fees. This means that once you factor in fees for independent legal advice you may be looking at extra costs in the region of £550-£750 plus VAT, along with a slightly longer timescale for the remortgage to complete.