How to avoid common delays with your refinance
Sarah McGuinness, Associate Solicitor in our Commercial Property team, specialises in secured commercial lending against a range of assets for both lenders and borrowers.
Calling on her vast experience, below Sarah outlines the main areas where borrowers may encounter when they come to refinance their property investments.
Land Registry Registration post-completion
When purchasing a property, it can take six months or longer to register at Land Registry. If you start the process of your mortgage application to refinance without checking with your solicitor whether the property is officially registered, you could be left with delays once the mortgage offer lands.
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Prior to starting your refinance, ensure you contact your previous solicitor to check whether registration has completed. If not, request your solicitor to expedite the registration at Land Registry due to your pending refinance. Land Registry will quicken up the process if they know your refinance is delayed due to registration.
Tenanted properties
If, following completion, you place a tenant in your purchased property, you must ensure you have taken all the correct measures, or you could cause delays with your refinance.
You must ensure the following steps have been acquired and completed as a minimum when the tenancy starts:
- An up-to-date Gas Safety Certificate
- An up-to-date Electrical Certificate
- EPC rated E or above (note that this needs to be raised to C by 2025 to Let out your property)
- Deposit is protected by a recognised scheme
- How to rent guide is issued at the beginning of the tenancy
If you have not done the above, a lender is less likely to lend to you. The above measurements offer an enforcement position if the lender repossesses the property and needs to get the tenant out; if they do not have the above, it will affect their ability to do this.
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If you are buying a property with a tenant in situ, ensure that you have the above 5 points in place to avoid any issues further down the line if you need to end the tenancy.
Properties in Article 4 Direction
When purchasing your property, ensure you read all documents from your solicitor. It may be that your property is in an Article 4 direction which prohibits permitted development for Houses in Multiple Occupation (HMO). This means that in order to let your property as an HMO, you will be required to obtain planning from the Council beforehand.
If you are not aware that the property is in an Article 4 area due to not reading the documents provided by the solicitor, you may change the use of the property into a HMO without having the necessary planning.
When you come to refinance the property, the lender will require evidence that planning has been obtained and if you cannot provide this, you are likely to be offered lending.
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If you are planning to convert a property you are purchasing into a HMO, Check the Local Authority website to see whether the property is in an Article 4 area before purchasing. This way you will know if you will be required to obtain planning or not.
Planning and Building Regulations
If you complete any work to the property that requires planning and building regulations (such as the removal of a load baring wall or the addition of an extension), when you eventually come to refinance the lender will likely ask you to provide documentation evidencing that you obtained planning and building regulation.
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A lender is less likely to lend if the works to the property are done without the necessary consents, particularly if the works were done in less than 12 months after purchasing. Sometimes you can obtain indemnity policies to cover if the works have been done for some time, but solicitors’ advice is always to get the correct consents.
Remember to ask for professional advice before doing any major works. Obtaining building regulations for the removal of a chimney breast is extremely important if you are removing it from a party wall, as you have an obligation to your neighbour also.
For assistance with the legal process surrounding your refinance, please get in touch with SarahMcGuinness@msbsolicitors.co.uk.
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