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Buy and Sell Within 6 months
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# 1
Snich76
Old 10-01-2012, 5:10 PM
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Default Buy and Sell Within 6 months

We are planning to start a venture buying and selling property. My partners are experienced in property development but not the buying and selling aspect. I have discovered that mortgage companies do not give mortgages to people who are buying properties that have been owned for less than 6 months.

Whilst this doesn't affect us initially, it could cause a problem when we come to sell a property we have only had for a couple of months or are flipping as the buyer may not be able to obtain a mortgage. Before I go back to my mortgage advisor, my question to you is this: does this 6 month rule apply to mortgaged properties only or all properties? Basically, if we were to purchase a property cash (without mortgage) then sell it within 6 months would the buyers mortgage company be ok with giving them a mortgage due to the fact that only 1 mortgage charge would go against the property within 6 months, or do they use the land registry information to ascertain ownership regardless of mortgage so even if we bought it cash then sold it to a buyer who wants a mortgage they would still reject their application?

Also, is this 6 month rule industry standard or just a select few mortgage companies?

Hopefully the above is clear and any feedback and sources would be appreciated?
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# 2
BitterAndTwisted
Old 10-01-2012, 5:15 PM
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A person or company can buy a property outright and sell it any time they like. As long as the purchase is made conforming to the usual money-laundering checks which conveyancers are legally-obliged to carry out..
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# 3
kingstreet
Old 10-01-2012, 5:19 PM
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Halifax policy. Probably mirrored by a few more.

Quote:
Sub-sales and back-to-back transactions are not acceptable.

A sub-sale occurs when a property is bought and then sold on within six months, i.e. the borrower is buying the property from someone who has themselves bought the property less than six months before. The date of registration at the Land Registry is how we determine the length of ownership.

This means that the current vendor must have owned the property for at least six months before we can accept an application to purchase that property.
Can't tell you if all lenders work the same way. I wouldn't be surprised if they did as buying and selling property is a way of layering laundered money in the financial system. I believe that's the reason for this stipulation.
I am a Mortgage Adviser. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
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# 4
Snich76
Old 10-01-2012, 5:30 PM
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Yes I had heard that Halifax definitely had a policy of not allowing it and assumed a lot of others did too, but am still unclear as to whether it is dependent on ownership or whether a mortgage had been obtained twice on the same property within 6 months.

Kingstreets quote would appear to confirm that it doesn't matter if we buy the property with our own mortgage or whether we buy it cash, our hypothetical future buyer more than likely wouldn't be able to get their own mortgage on it as we owned it less than 6 months even if we paid cash for it. It would be a pain to have to own a property for 6 months before selling as we were hoping to do more than 2 per year!
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# 5
googler
Old 10-01-2012, 5:32 PM
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Quote:
Originally Posted by BitterAndTwisted View Post
A person or company can buy a property outright and sell it any time they like.
Yes, but if the buyer(s) can't get lending because the seller has owned for less than 6 months, it'll severely restrict the buyer base.....
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# 6
Doozergirl
Old 10-01-2012, 5:46 PM
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We didn't have a problem a couple of years back and I was aware of this policy. I presumed our buyers lender didn't have the same policy (It was either Nationwide or Barclays) but we'd bought cash so that doesn't really narrow it down for you!

You're either exceptionally lucky or a bit shoddy (or indeed a money launderer!) to be able to turn around with completion within 6 months, which is why I think that rule is there. We were in the lucky category with that one, the guy upstairs had agreed a sale but changed his mind and we were able to sell on to his FTB buyers without even marketing it.
Everything that is supposed to be in heaven is already here on earth.

Last edited by Doozergirl; 10-01-2012 at 5:50 PM.
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# 7
DominicJ
Old 10-01-2012, 5:49 PM
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6 months completion to completion is a fairly tight time scale to buy, renovate, market and sell a house.

It can be a month between exchange and completion, and a months between initial offer and exchange, not to mention the month it sits on the estate agents books for.
If you're buying houses that need a lick of paint and new carpet, I'd be surprised if you're making money.

6 months sounds a long time, but a massive amount of that will be waiting for the buyer to sort his end out anyway
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# 8
princeofpounds
Old 10-01-2012, 5:55 PM
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It's not a blanket policy but it is quite common. You will find it much more difficult to sell a house that has been owned for such a short period.
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# 9
geoffky
Old 10-01-2012, 6:02 PM
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What could go wrong??? So much that the op has not even thought about..I would wish you good luck but it is a miracle you will need.
It is nice to see the value of your house going up'' Why ?
Unless you are planning to sell up and not live anywhere, I can;t see the advantage.
If you are planning to upsize the new house will cost more.
If you are planning to downsize your new house will cost more than it should
If you are trying to buy your first house its almost impossible.
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# 10
clutton
Old 10-01-2012, 10:22 PM
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in most property development buy/renovate/sell or buy/sell the 6 months rule applies with all lenders - talk to a whole market mortgage broker to ask if a cash purchase makes any difference... i can PM you one if you cannot find one for yourself.
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# 11
kingstreet
Old 10-01-2012, 10:59 PM
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Quote:
Originally Posted by timmyt View Post
developer part exchanges happen all the time. speak to your mortgage broker and make lender aware of the cirsumstances
A developer part-ex is specifically excluded from the six month rule; as are a couple of other situations;-

Quote:
The following cases are exceptions where it is acceptable for the property to be sold on within six months of acquisition by the seller.

Where sales are by:

A personal representative of the registered proprietor; or
An institutional mortgagee exercising its power of sale; or
A receiver, trustee-in-bankruptcy or liquidator; or
A developer or builder selling a property acquired under a part-exchange scheme.
TBH I didn't mention them as they didn't appear to assist the OP's situation.
I am a Mortgage Adviser. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
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# 12
Snich76
Old 11-01-2012, 10:13 AM
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Thanks for all the feedback. DominicJ probably hit the nail on the head saying that 6 months is probably about average start to finish anyway but it makes sense to investigate all eventualities. On that subject:

Quote:
Originally Posted by geoffky View Post
What could go wrong??? So much that the op has not even thought about..I would wish you good luck but it is a miracle you will need.
Clearly we have researched the project not to mention that years of experience my partners have, but I see no point detailing every piece of research in my OP irrelevant to my question, and any specific (reliable) information we need would be sought from professionals as opposed to anonymous strangers on a forum. Law of averages I guess, out of all the helpful posts in this thread from good contributors to this site, there will always be one bad egg.
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