Leases and Buy-To-Let Mortgage

Leases and Buy-To-Let Mortgage Solicitors Glasgow, Scotland 

Many prospective landlords or investors may find the idea of letting out a property attractive, but are unsure of what steps they need to take to start. The process of making a property available for rent can appear to be quite complex: lots of paperwork with the involvement of banks and other organisations.

Here we provide an overview of the basic steps that need to be taken before a property can be let out. We at Miller Samuel Hill Brown have an expert group of Property solicitors who are ready to work with you, to advise you on the steps needed to let out a property. We will help you understand and guide you through each stage of the process.

How to get started?

The first thing that needs to be considered is how to purchase a property that is to be used specifically for letting purposes. Generally there are two ways of financing this:

  1. Taking on a Buy-To-Let Mortgage; or
  2. Buy the property privately through personal funds.

Generally most people will not have the kind of money required to buy a property in savings. As a result the most useful way of financing the purchase is through a Buy-To-let Mortgage.

What is a Buy-To-Let Mortgage?

A Buy-to-Let Mortgage is a special kind of loan that is granted by a Mortgage Provider, normally a bank, that is designed specifically for properties that have been identified to be let out. A Buy-To-Let Mortgage is largely the same as a Residential Mortgage. However the main difference is that it will normally be more costly to get a Buy-To-Let than a Residential Mortgage.

The reason for the added expense is that a Lender is at an increased risk in providing you with a Buy-To-Let Mortgage. In becoming a landlord you will collect rent from your tenants to make the mortgage repayments. However if your tenants fail to make their rent payments at the agreed times, or you experience long periods of time without tenants, you may struggle to meet the repayments.

What do I need to do?

As would be the case in applying for any kind of loan, before you will be able to apply for a Buy-To-Let Mortgage, you will need to meet certain criteria. The most important of these is that you can satisfy the lender that you will be able to repay the mortgage.

Buy-To-Let Mortgage providers will take a number of things into consideration before they offer the mortgage. They will need to know, amongst other things:

  1. What percentage of the property’s value are you attempting to borrow?
  2. How much rent are you likely to expect from the property?
  3. Do you have any other Buy-To-Let Mortgages?

Mortgage Providers are essentially taking note of how much risk there is in you not being able to meet the repayment terms. As a result, they may offer a Mortgage but could attach conditions to your loan relating to the type of tenancy you offer tenants or, limit the number of Buy-To-Let Mortgages you take on in the future.

What is a Lease?

A Lease is a legal document that sets out how the property is to be used by a tenant. It will also set the responsibilities of both you as a landlord and your tenant in respect of the property:

  1. Costs

An important point to consider in making a Lease for a property or premises is what costs you will be prepared to pay as a landlord. It is wise to make it very clear to tenants what aspects of issuing and taking on a Lease you will be prepared to cover, and what aspects your Tenant will be required to cover.

  1. Service Charges

Depending on the individual that you are dealing with in negotiating the terms of tenancy, you may consider offering additional services. These things can include car parking availability and paying some utility bills. It should be made very clear to a tenant in the Lease what services you are providing, and what implications this will have for tenants in terms of additional costs that they will be liable for.

  1. Insurance

Insurance is incredibly important when considering letting out a property. It should be set out within a Lease exactly who is responsible for arranging and paying for the property’s insurance.  Furthermore in the case of rented premises there may be a need for other insurance cover to be arranged e.g. contents insurance. It should also be pointed out in the Lease who is responsible for arranging and paying for this.

  1. Contents

Depending on the length of the lease that is being offered, you may want to consider providing tenants with fixtures and fittings for the premises. Furthermore it may also be, that in the case of serviced areas, you will consider providing other pieces of furniture e.g. writing desks and or additional shelving. 

  1. Terminating the relationship

It is important that you include a mechanism to allow for the termination of the lease. The option to terminate a lease will often depend on the length of time that a lease is being offered. For example, a lease may be offered for a period of 1 year, with a termination date being available after six months. However some circumstances may be more complicated than this, and there will need to be details of any penalties that a tenant will incur if they attempt to terminate the lease before a certain period of time has passed.

The process of purchasing and making a property available to let is quite complicated. Not only is there often a lot to consider in organising the finances for the property, there is often a great deal to be included in the agreement between the landlord and their tenant. Most of these details will be agreed following negotiation between parties, which is why it is incredibly important to receive expert legal advice when dealing with leases.

Contact our specialist Property Lawyers in Glasgow

At Miller Samuel Hill Brown our specialist property lawyers are here to help. They have a great deal of experience in handling Buy-To-Let Mortgages. They are also skilled in negotiating the terms of a Lease. If you are considering purchasing a property for let, or are worried about how to draft a lease, please contact us. We can help. Please contact our experts on 0141 221 1919 or fill in our online contact form.

Get in touch today

Please let us know your name.
Please enter a valid telephone number
Please let us know your email address.
Invalid Input
Invalid Input
Please let us know your message.

News & Insights

Read the latest insights from our team

The Devil’s in the Detail
Read the full article
Congratulations, you’ve bought the home of your dreams. A new build property with a drive way. It’s your property, so you can do anything you want with it. Right? Well, no actually. Or more accurately it depends upon your title burdens, particularly ...
Purchasing a Listed Building in Scotland
Read the full article
When searching for a new home, do you find yourself drawn to, unique, charismatic, older, and characterful properties? If so, then you may find yourself falling in love with a listed building. Listed buildings enhance Scotland’s charming landscape an...
Register of Persons Holding a Controlled Interest in Land
Read the full article
The Register of Persons Holding a Controlled Interest in Land (RCI) was launched on the 1 April 2022. This new register, which is managed and maintained by the Registers of Scotland, was established as a result of The Land Reform (Scotland) Act 2016 ...
Top Tips for Reducing Stress While Purchasing Your Dream Home
Read the full article
Purchasing your dream home sounds exciting, right? Well, it certainly is. However, the process of purchasing a property can be equally as stressful and the current competitive market has exacerbated the potential for stress. Not to mention that buyin...
The Additional Dwelling Supplement Increase in Scotland
Read the full article
There are various reasons why you may consider purchasing a second residential property. Maybe you are looking to invest in a buy-to-let property, or maybe you would like to have a holiday home to escape to on the weekends and during the holiday...