Hello and welcome back to the Cullen Property blog! In today’s piece we will be discussing all there is to know about buying a HMO property in Edinburgh and what happens before and during the transaction process if your goal is to let it out as a high-quality residential property.
At Cullen Property, we have decades of experience in Edinburgh’s residential property investment market, and are a trusted and registered Edinburgh Letting Agency which specialises in the sourcing, acquisition and ongoing management of HMO property in Edinburgh. Read on to find out all there is to know about buying a HMO property in Edinburgh!
Buying A HMO Property In Edinburgh – Pre-Transaction
If you have not bought an HMO property in Scotland before, you may be surprised to learn that a typical sales scenario starts with the seller obtaining a home report at their cost (usually around £600).
Once this is obtained, the property is put on the market with an asking price of ‘offers over’ a price which is usually slightly below that stated on the Home Report valuation.
Viewings are arranged for prospective purchasers, and there are often ‘open door’ viewings between set times (typically 7pm-8pm Thurs, and 2pm-4pm Sun) as well as at other arranged appointment times.
Interested parties can ‘note interest’ whereby their solicitor advises the selling solicitor that they may be interested in offering/bidding for the property. The seller can negotiate or accept any offer at any time. However, if there is good interest from several parties, a ‘closing date’ may be set and all prospective purchasers who have noted interest are invited to submit their ‘offer’ via their lawyer.
Once a closing date has been set the seller and selling solicitor should honour that and cease any discussions or negotiations until all parties have had the chance to offer. Although, it’s important to note that this doesn’t always happen.
These offers are usually in excess of the valuation and can typically be circa 5-10% above the Home Report valuation/ They are also often ‘subject to’ various conditions such as; mortgage, entry date, roof report, etc) but usually the highest offer is taken by the seller. However, the seller can also accept any offer or may choose to not accept any at all!
Buying A HMO Property in Edinburgh – Transaction
Once an offer has been successful, the purchasing solicitor will request title deeds, coal board reports, roof reports, financial charges (over the property) reports and any items that were listed under the ‘subject to’ matters in the offer. These might include roof reports (especially if buying a top floor flat), tenancy documents (if being bought with sitting tenants), safety certificates, HMO licence, guarantees for previous works (such as roof and wood treatments, etc). The purchasing solicitor will also require proof of any mortgage offer which is being used to buy the property.
Once the purchasing solicitor is completely satisfied that everything is in order, he/she will ‘conclude missives’ (this is the Scottish equivalent of ‘exchanging contracts’) on behalf of the purchasing client.
The purchaser is not legally bound until conclusion of missives has taken place which is usually 4-8 weeks later and often just prior to completion/entry date.
On the completion date the two lawyers confirm that funds have been sent/received by one another and the purchaser can then collect the keys from their solicitor.
Thereafter, the purchaser has seven days in which to notify their solicitor of any issues which may be wrong with the property (e.g. boiler not working) and the seller can be held liable to put anything right which was part of the contract of sale.
Needing additional information? Feel free to check the Scottish Government website for any additional information here.
HMO Property Video Resources
Considering buying a HMO property? Great! Now you need to know how to learn more about the regulations and safety and how to prepare your HMO for the market. Click the links to view our helpful explainer videos!