When purchasing property in any sector of real estate, investors must complete a plethora of requirements before the transaction is finalised. In-person meetings will be required, as will the transfer of papers and legal documents. Acquiring a mortgage is a time-consuming endeavour because it requires approaching a lender to obtain a mortgage agreement in principle, which might take a lengthy time depending on the institution's response time. This could take several days or even a week. The pre-contact stage could take 4-12 weeks after you identify a suitable property. This would necessitate the conversion of the mortgage principle into a concrete mortgage offer. This is when the lender comes in, conducting their own valuations on the property before returning to you in a few weeks. Following this, the conveyancer you appointed will begin drafting the contract, which could take 1-5 weeks.
The exchange to completion process is the most time-consuming, taking 12 weeks to complete. The contract changeover takes between 20 and 30 days. Conveyancers will exchange signed contracts, and the investor will pass over the deposit to their solicitor to legally bind the arrangement. Following that, a completion date will be determined upon, which could range from a few days to several weeks. The funds will be transferred, and the property keys will be handed over. There may be a few additional tasks to perform throughout this timespan. Obtaining property insurance, signing additional agreements depending on the complexity of the property, and drawing funds for the seller on the completion day. These could add a week or two to the acquisition timeline.
After obtaining the keys to the property, there are a few more steps to follow before the entire process is completed. Property purchases may need the payment of stamp duty taxes. Your conveyancer will advise you of the information and timing required to make the payment. After that, you must register your ownership of the property with Land Registry. Following the registration, your conveyancer will receive copies of the property's new title deeds and share them with you and the mortgage lender. This process might take 2 weeks in total, bringing the total time to acquire a property to 5-6 months.
Acquiring a BTL mortgage takes roughly the same amount of time as obtaining a standard mortgage, and in certain cases, considerably longer due to additional stipulations. To qualify for a BTL mortgage as an investor, you must already be a homeowner and earn more than £25,000 per year. This will qualify you for a certain BTL mortgage. BTL mortgages differ significantly from regular mortgages in several ways. BTL mortgages are often interest-only, which means you will only pay the interest on your loan each month, rather than the principal. A BTL property will also necessitate a deposit of at least 25% from investors.
BTL assets are subject to a variety of taxes that investors must pay. Rental income is the primary tax that BTL investors must pay. Capital Gains Tax (CGT) is a tax levied on any increase in the value of a property since it was purchased. Once you have sold your rental property, you must pay this tax as an investor. Additional property owners will also have to pay an additional 3% stamp duty. This is added to each property in an investor's portfolio.
The complications of property purchasing can be a lengthy process, however at Novyy this is no issue as we solve all these issues for you. We provide a digital buying experience which aims to make the buying process as quick and easy as it can ever be. After signing up and verifying KYC-AML which takes less than 5 minutes, investors can begin browsing available properties, request allocations and sign agreements all online and when purchasing the property fractions can wire transfer their purchase. The buying process itself can take between 2-5 minutes making the overall process after signup anywhere between 7-10 minutes.
All Novyy properties are mortgage approved and funded by senior lenders and banks completely eliminating the process of lender acquisition and paperwork transfers. The due diligence and marketability of each asset is done by us and ensured to be the top quality. Buying ownership fractions of Novyy properties also relieve you of taking on management and maintenance inconveniences that come with traditional BTL. Once an investor purchases a property fraction, there are no further costs to be paid. The fraction will be added to their portfolio and income can be generated immediately.
The due diligence carried out by Novyy to select properties is thorough and follows a checklist of requirements to ensure the quality of the property. The property should be in a suitable location for tenants, for example within walking distance to city centres, universities or corporate buildings. The lettings value and interest coverage ration should be able to deliver target yields at 85% occupancy. Break even income should be at an occupancy lower than 60% or around that level. The property should have a strong potential of 3x equity multiplier over the medium to long term outlook.
The emergence of digitisation in many sectors has inspired us to redefine the way properties are purchased in order to make things easier for both parties. Digitalisation will break down the barriers of paper agreements and delays, dramatically enhancing transaction speed. Novyy wants investors to be able to buy in minutes using our system. Due to the improved transparency, buyers and sellers would benefit greatly from direct access to legal papers and information regarding property transactions. Digitalisation will also lower the costs associated with the conveyancing procedure.
The efficiency of transactions allows both buyers and sellers to save time, giving the buyer a greater sense of satisfaction than traditional property transactions, which a buyer could pull out of early or halfway through. This allows the seller to move on to their next client or accomplish a large number of transactions in a short period of time rather than waiting months for one transaction to be finished before beginning on another. The benefits of digitalisation in real estate transactions include the simplification of document management. Management of paperwork the traditional way can be extremely gruelling due to the volume of documents needed to be accessed at certain times and these could be difficult to locate or lost. Digitalisation allows these documents to be uploaded and stored in a secure database, allowing for instant access, management and updates seamlessly.
Novyy's investing procedure for buyers is structured very similarly to stocks and cryptocurrencies, with property fractions purchased quickly and stored in a portfolio. This investing structure aims to make transactions as simple as possible for investors, which is uncommon in the real estate industry. We want our investors to feel as at ease as possible since we will handle all of the tedious duties associated with property management.
Novyy is an investment platform designed to facilitate private market investing for individuals and family offices globally who wish to invest in the British Buy-To-Let market. Novyy users enjoy seamless digital investing like never before, in opportunities that were earlier unavailable to most individuals. This piece should not be construed as tax advice. Please refer to your tax advisor before making any decisions on owning properties through Limited Companies.
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