Posted by Admin - 08/09/2016
When purchasing a buy-to-let property it is important to consider all of the costs associated with the transaction.
Firstly, valuation fees. Lenders will charge a fee to have one of their valuers to inspect a property. This is to ensure there is sufficient security for the lender. The cost of this usually ranges from £150.00 to £450.00. It may be an idea have a private valuation by a RICS surveyor if you do not know what condition your property is in.
Secondly, you will need to make sure you are prepared for your solicitor fees. You may already have a specialist property conveyancing solicitor especially if you already have a buy-to-let portfolio, therefore you should be aware of roughly how much the fees will be.
Searches are another cost that cannot be avoided. This is where your solicitor will look for any unusual aspect to the property. This can include conservation issues, rights of way and environmental issues. In most cases this cost will be factored into your solicitors fees providing nothing substantially time consuming crops up in the process.
Ensure you acknowledge the costs of paying stamp duty land tax and are aware of what threshold your property fits into. In April 2016, stamp duty tax liability increased for anyone purchasing an additional property. The stamp duty thresholds are as follows:
|Band||Existing Residential SDLT rates||New Additional Property SDLT Rates|
|£0 – £125k||0%||3%|
|£125k – £250k||2%||5%|
|£250k – £925k||5%||8%|
|£925k – £1.5m||10%||13%|
Furthermore, there are land registry fees too. This simply means that you have to pay to have the title registered in your name. Usually this will be paid by your solicitor and then you will repay this once you are given the final bill.
You should also take getting the property ready into consideration. For example there may be some remedial works that need to take place before it is habitable. Even trivial things such as towel rails, mirrors and shelves will need to be thought about as all of these costs add up. A professional clean of the property may also need to be done prior to putting it on the rental market. You should probably allow £200 – £400 for this depending on the size of the property.
Lastly you will need to pay for a gas safety certificate. The price of a gas safety certificate varies dependent on the engineer so it may be an idea to get quotes from several.
Remember, it is illegal to let your property without a gas safety certificate and if you are found doing this you can be punished by fines or imprisonment.