Welcome To SingingPig.co.uk

Can anyone that knows how to get by this contact me asap please.

 I have a property bought for cash at xmas and have buyer lined up but its stalling. The property is in Scotland.

call nick on 07917797307 or email me thanks

Hi Devo,

Some residential lenders dont have a problem with the 6 month rule - it depends on who your buyer is using to purchase the property.

 Regards

John

I am a bit confused as this may apply to me, I realise that if I try to remortgage a property that I bought less than 6 months ago then most lenders will decline, however are you suggesting there is an issue for the person who buys off me if I haven't owned the property for longer than 6 months, or have I got the wrong end of the stick?

MrDavies:

...are you suggesting there is an issue for the person who buys off me if I haven't owned the property for longer than 6 months, or have I got the wrong end of the stick...?

Spot on.  It may be difficult for your buyer to obtain a mortgage.

The CML Handbook for most lenders states that if the property has been owned by the previous owner for less than 6 months then the matter must be reported to the lender by your solicitor.  Some lenders may decide to lend to you despite this, but it is becoming increasingly rare.

As John Simpson says - residential mortgage lenders are usually more relaxed about this than BTL lenders.

One solution, if you're flipping, is to never take ownership of the property - simply use a re-assignable Option Agreement.  There are additional benefits of going this route... you don't need a mortgage yourself, you won't be liable to Stamp Duty, your legal fees will be virtually zero.   You will simply pay tax on the "profit". 

If you need to undertake work on the property before passing on to a new owner then you can, via a solicitor, gain legal authority from the owner to undertake works before the end buyer takes ownership.

Thanks for that Alano, this is exactly the kind of stuff I signed up on this forum to learn.

Its a bit of pain to be honest. I bought my first repossession a few months ago and I am looking to sell it in the next month or so, its an issue that I didn't expect. At the risk of sounding like an idiot, I have never seen this mentioned in any of the property programs I have watched or read it in any of my material.

I wonder if anyone who flips properties has any experience of this and the problems it may present. Also with this reassignable option, is this undesirable to banks if you buy repossessions? Will it scare the average man away if you want to buy a property off him with this method? How does everyone else who flips property get around this?

Cheers

Matt

Hi Matt.  You're welcome.

Do a search on the forum for "flipping" - you should find shedloads of stuff.   Re-assignable options were the main method used for flipping before the days of BTL mortgages (late last century!).

If you're buying a repo direct from a bank then they will probably not accept an Option Agreement.  If you're buying from a vendor who's about to be repossessed, and you're liaising with the lender to stave off repo, then the Option Agreement may not suffice (I have a trick you can use if this is what you're doing).

Let me know more detail about what you're doing and I'll try to help.  Contact me by email if you prefer to converse off-forum (use the Contact button at top right of this message) and I'll reply asap.

Cheers,
Alan

Thanks again Alan,

I will have a look on the rest of the forum for property flipping and I may pick your brains at a later stage.

I have already bought my one property and have just about finished it but it won't reach 6 months till May, which is a pain. I was wondering how people got around this rule for flipping and a reassignable option may be the way forward for me. I am starting my search for another property soon and so I need to avoid these kind of mistakes. I also need to flip more than one property every 6 months +, otherwise I will be very poor and very bored. I don't know where my next project will come from yet but it is good to know the options available to me.

Cheers

Matt

MrDavies:

At the risk of sounding like an idiot, I have never seen this mentioned in any of the property programs I have watched or read it in any of my material.

Hi Matt,

that will be because many of the people selling courses aren't doing property!

I am seeing more and more of this issue coming up as well as many others you won't get taught on a course! People rarely pay for courses to be told what they can't do only what they can!

Only last week a solicitor told me his own niece (a very well paid doctor) had her mortgage pulled on the day of exchange when the lender found out she was buying a property that had only been owned for a few months. The seller had bought the property at auction and completely renovated it then sold it via an estate agent. Perfectly legitimate but the lender would not have it - this was for residential use not buy to let. She was gutted and not even her uncle the solicitor could persuade the lender to change their mind.

Options, assignable contracts, power of attorney etc are all possible but these will usually only work when you have direct contact with the seller. If its via an gent, auction, repo, liquidator then you’re very unlikely to get round this.

The biggest problem I’m finding is that the lenders aren’t consistent - if its a standard rule they all apply then we can work with that if not then we are all stabbing in the dark until the money is drawn down by which time everyone has usually committed a lot including money to the deal.

If you’d like to hear a few other truths about property then feel free to contact me!

Lisa