6 month rule

paul1

We are in the process of buying a house that needs refurbishing. We were thinking 3 months in, to do the work and then put it on the market, but today heard about the 6 month rule. We were aiming for the first time buyer , who would need a mortgage so how would we stand? Am now thinking it was a bad try at property developing as we don't want to live in it for six months, and can't afford to rent it out.

Annisele

If you're not looking for cash buyers, then you effectively can't complete on a sale for six months after you've bought. You can start marketing at three months, but it's unlikely you'll be able to sell.

But more fundamentally...

If you can't afford to rent it out, what will you do if it doesn't sell immediately? Or if the works cost more time/money than you expect?

Are you buying with a mortgage, and if so is it mortgageable? I ask because adding value to an FTB type property is likely to involve some major work - and the fact that work is required may make the property unmortgagable.

Do you have experience of property development? If not, run away fast.

[Deleted User]

I have viewed a few properties over the last few months that were newly refurbished and had been owned for less than six months. Couldn't buy any of them for that reason. In some cases the agent just neglected to mention that point, which is really bad form. In one case the vendor showed me round and she had no idea that this was going to be an issue.

I'm told there are a small number of mortgage companies that will lend on such a property only at a low LTV, which is likely to rule out most FTBs.

DominicJ_2

Three months work
A Month Advertising
Two months to exchange and complete.

I'm amazed anyone *ever* comes up against the six month rule when doing serious work.

I once had breakfast with a founder of Love Film.
His advice to me, was to identify where you add value.
Going to B&Q and getting a big pot of magnolia doesnt add value, so its not a business idea.

If you can't afford to rent it out, what will you do if it doesn't sell immediately? Or if the works cost more time/money than you expect?

Riggster

I'm buying a house that was bought by developers at the beginning of April. I hope to complete next week. My mortgage lender is a traditional building society (the Newcastle) and had no problem with it being less than six months when my solicitor explained the circumstances.

Apparently the bigger banks just have a "computer sez no" attitude because of money laundering concerns.

kingstreet

There are some lenders who do not operate the six month rule and there are no LTV restrictions.

Others, such as Halifax, will not accept an application until the property has been in current ownership for six months.

marathonic

I ran into the 6 month rule when buying my house - it was the result of a failed attempt of the seller to sell the house to his son who'd sell it onto me in order to avoid the 'extra' money going into his account and being taken by the bank for his debts.

I'd no idea what was going on as the father/son had the same name. It eventually was brought to light by my solicitor. When I read threads from people thinking about doing their own conveyancing as opposed to paying a professional, it always puts thoughts into my head as to what could have happened had I gone down that route.