Can You Predict Timescales in BTL Property Transactions?

We get it. Once you’ve taken the decision to embark on your property investment journey you just want to get on with it – right now! But property transactions take time, sometimes a lot of time, how will you possibly manage?!

Timescales in BTL property transactions are not necessarily the same as those in residential transactions, and we’re going to explain why this is the case, highlighting the key differences which might help you complete more quickly.

We have years of experience in the buy-to-let market, but (obligatory disclaimer) we’re not solicitors, so if you need legal advice regarding property transactions, speak to your legal adviser.

Property transactions – the basics

Like many aspects of Scots Law, conveyancing in Scotland differs from the rest of the United Kingdom. In some respects it’s more streamlined, and therefore conveyancing – buying or selling property – can happen more quickly.

However, this isn’t always the case and complex transactions can take considerable time and rack up legal fees. That said, conveyancing – the legal aspect of buying or selling – is usually completed in 4 to 10 weeks.

The method of financing the purchase will have a direct effect on timescales. Buyers who have cash available will often be looking at around 4 weeks to completion after receipt of the formal offer.

Buyers reliant on a mortgage may see the transaction take twice as long, this being due solely to the added time of getting approval and finalising the mortgage. Many buyers will have an agreement in principle, guaranteeing the lending.

There’s a good guide to the process in Scotland here, we’ve listed the key steps below. Note that this is based on residential purchases, we’ll cover the differences which apply to investment properties a little later.

• Instruct a solicitor or conveyancer
• View properties
• Make an offer on your preferred property
• Formal offer accepted
• Start conveyancing
• Title and local authority searches
• Draft the disposition
• Conclude missives 
• Settlement and handover
• LBTT and property registration

Residential property sales predominantly take place on the open-market with properties being advertised and viewed several times. If the property is desirable, the seller’s agents will have to field several competing bids.

Selling on the open market can be profitable, but many factors can extend the sale period to several months. Property chains, with each party waiting on the completion of another transaction, are a common issue.

Buying an investment property

While the legal process surrounding the purchase of an investment property is the same, other factors differ considerably. One key difference is that residential buyers are looking for a home – investment buyers aren’t.

Investment properties can be bought through the open market, but many are bought off-market or through specialist agents who deal only in buy-to-let or investment properties.

Property investors have different priorities; they’re not looking for a property to live in, they might look at a variety of areas across Scotland and the bottom line for them is that this is a business decision.

This means that buyers seeking an investment opportunity are not necessarily competing with residential buyers and the attendant risk of the price being pushed up as a consequence of the bidding process.

This is important because the cost of the property is a major factor in the overall viability of the investment, therefore price will be key. That’s not to say that there aren’t negotiations over price, there are, but it’s not a blind auction.

The purchase process is much the same, since the same law applies, but there are differences.

• Instruct a solicitor or conveyancer
• Request the Home Report
• View the property
• Negotiate price & make offer
• Formal offer accepted 
• Start conveyancing
• Title and local authority searches
• Draft the disposition
• Conclude missives 
• Settlement and handover
• LBTT, ADS and property registration

To add to the difference between this and residential sales, the buyer may decide to take on an existing tenant and so transfer of lease and security deposit will have to be dealt with.

These additional concerns notwithstanding, the purchase or sale may well be completed at the lower end of the timescale suggested for residential sales.

Time savings for property investors are largely accounted for by not getting involved in a bidding process with other buyers and avoiding the delays occasioned by property chains.

Property professionals may also be ‘better’ at buying and selling properties, understanding the process more fully and prepared to do the work necessary to expedite the process, allowing their solicitors to get to work more quickly.

The process of transferring legal ownership of a property is the same regardless of whether it’s a private home or a buy-to-let investment, so expect the legalities to take the same amount of time.

Property portfolios

When purchasing or selling a portfolio, the principles above hold but the greater number of properties involved will generally mean that overall the process will take longer.

On average, we see timescales of around 4 months (12 to 16 weeks) to completion from the point that the formal offer is received.

Obviously if you purchase properties individually, the whole process will take longer still; purchasing a complete portfolio of six or more properties is increasingly popular as it brings considerable benefits with regards to ADS.

Advice from the property pros

Timescales in BTL property transactions can be shorter than those in residential sales, but when this occurs it is because of factors other than the purely legal necessities.

Being aware of the process and actively doing everything that you as the buyer need to, as soon as possible, will allow your solicitor to get to work that much faster, leading to a speedier conclusion.

Buying off-market may well save you time by reducing the number of viewings you need to perform and getting you out of the residential property merry-go-round.

We’re not saying that you shouldn’t buy on the open market if it makes sense, just be aware that transaction times can be longer – sometimes much longer – which is something to factor into your plans for that property.

In summary…

Timescales in BTL property transactions can be shorter, but as alluded to above, this is because as professionals you understand the process and are willing to actively address issues, thereby making the process more streamlined.

Working with solicitors who have experience of investment transactions will help, as they will understand your priorities, and forming a lasting relationship will always be to your benefit.

That said, remember that solicitors can also have heavy work loads, prioritising soon-completing transactions. They may even have holidays scheduled during the conveyancing process, which can add further delays.

As a business which specialises in facilitating the sale and purchase of buy-to-let properties we are ideally placed to guide you through the process, offering advice and practical help when needed.

Please get in touch to discuss your needs, whether you’re a first time property investor or an experienced landlord looking for another portfolio.

As always, thanks for reading!

Written by Chris Wood, MD & Founder of Portolio

Get in touch on 07812 164 842 or email [email protected]