Searches, title investigation and HMO licence checks
The buyer's solicitor orders searches and investigates title before exchange of contracts — the BTL-specific issues to focus on:
- Local Authority Search (LLC1 + CON29): reveals planning permissions and refusals; enforcement notices; listed building status and conservation area; article 4 directions (critical for BTL buyers intending HMO use — an Article 4 direction removes permitted development rights for HMO conversion; the local authority search will reveal any Article 4 direction in force); road adoption; public rights of way; drainage agreements; compulsory purchase
- Water and Drainage Search (CON29DW): confirms connection to public water supply and sewer; records of adopted drains and sewers; flooding from water company data
- Environmental Search: risk of contaminated land (former industrial use; landfill; petrol stations); flooding (EA Flood Zone maps; surface water; rivers and sea); ground stability and subsidence; radon gas levels
- Chancel Repair Liability Search: whether the property lies within a historic ecclesiastical parish where chancel repair liability attaches to freeholders — since 2013 this must be registered to be enforceable but unregistered historic liabilities may remain relevant
- Coal Mining Search (where applicable): essential in former coal mining areas (South Wales; Yorkshire; Nottinghamshire; County Durham; Tyne and Wear) — reveals subsidence risk from former workings
- Title investigation — Official Copies (OC1 and OC2): (a) Existing charges (mortgages): the seller's mortgage must be discharged on completion; buyer's solicitor obtains redemption statement and ensures Form DS1/DS3 discharge is registered; (b) Restrictive covenants: historic restrictions on use or development (no commercial use; no subdivision; no extension without consent) — critical for HMO conversions and planned alterations; (c) Easements and rights: rights of way; drainage rights; shared access; party wall arrangements; (d) Leasehold: lease term remaining; ground rent (must be peppercorn for new leases under Leasehold Reform (Ground Rent) Act 2022); service charge history (check for large planned or historic major works); section 20 consultation compliance; (e) HMO licence checks: if the property is currently let or intended to be let as a mandatory HMO, raise pre-contract enquiries about the existing HMO licence (number; expiry date; conditions; any outstanding enforcement); HMO licences are NOT transferable on sale in England — the buyer must apply for a new mandatory HMO licence from the local authority before letting the property as an HMO; applications can be submitted in advance of completion
Exchange, completion, SDLT/LBTT/LTT and Land Registry registration
- Pre-contract enquiries (TA6/TA10 for residential; CPSE for commercial): boundaries; disputes; notices; planning and building regulations; utilities; current tenancies; deposit protection details (these obligations transfer to the buyer on completion — ensure deposits are in a scheme and prescribed information has been served); outstanding notices or possession proceedings
- Exchange of contracts: the legally binding commitment; buyer pays 10% deposit (by arrangement, sometimes 5%); completion date agreed (typically 4-8 weeks after exchange for standard residential BTL); in a chain, exchange is coordinated across all parties
- Completion: balance of purchase price transferred electronically; keys released; buyer becomes legal owner and steps into the landlord's shoes for existing tenancy obligations
- SDLT (England) — due within 14 days of completion: BTL purchases (second or additional residential property) attract the 3% additional dwelling surcharge in addition to standard SDLT rates; the surcharge applies to the full purchase price; SDLT return must be filed and SDLT paid within 14 days of completion — HMRC imposes automatic penalties and interest for late filing; most solicitors file SDLT as part of completion but the buyer should confirm this
- LBTT + ADS (Scotland): Land and Buildings Transaction Tax at standard residential rates; Additional Dwelling Supplement (ADS) at 6% (from April 2024) applies to BTL purchases; return filed and tax paid within 30 days of completion (the effective date of transaction)
- LTT (Wales): Land Transaction Tax at Higher Residential Rates applies to additional residential property purchases in Wales; return filed and tax paid within 30 days of completion
- Land Registry registration: after completion, the buyer's solicitor applies to register the transfer (Form TR1) and any new mortgage charge (Form CH1); standard applications typically registered within 1-6 months; leasehold registration may take longer; the buyer receives an Official Copy of the updated title register; title registered as Title Absolute (freehold and good leasehold) or Qualified/Possessory (defective titles)