Let to Buy is simply the process of letting out your existing property to enable you to move forward with a new residential purchase. This can be done in a couple of different ways, but it is important to note a few areas where reserving on this basis may cause problems further down the line.
Aside from the obvious downside of incurring a (potentially temporary) 3% stamp duty surcharge, it is important to understand where the deposit funds for the onward plot purchase are coming from. Let to Buy can be achieved by remortgaging onto a Buy to Let mortgage or by obtaining Consent to Let from the existing lender. It should be taken into account that if additional funds are being drawn down from the current property as a deposit, once these funds have been released (usually on exchange), the purchaser can no longer reside in the property. This is particularly relevant for plots with a long completion date, as it can often cause issues at the point of exchange.
We’ve recently seen a number of purchasers reserve on this basis with no intention of renting their properties out, but rather selling at a later date and introducing a chain further down the line. Your Account Manager can talk you through how Let to Buy can work well and when to avoid it.
