For many, buying any property is a dream come true. Luxury property is one step further.
Homebuyers care about the bricks and mortar. They want to know how a property looks and feels, the direction of the back garden and the choice of schools nearby.
For investors, a luxury property is viewed as an important – and valuable – investment. Property is considered by many as way of investing funds with the hope of reasonable capital growth, until the funds are needed for other things.
As lawyers, we are often required to steer a course between the two approaches. Good due diligence needs to ensure the client secures the house of their dreams, whilst also ensuring the investment can be easily realised or used as security in future. Here are our top tips in ensuring your make the right luxury property purchase.
Is it marketable?
The first step in any process of due diligence is to ensure the property is a good investment, now and in the future. At the most basic level, lawyers must ensure that the title is marketable. With new properties (including those purchased ‘off plan’), a huge range of factors need to be taken into account, including the split of title, the rights and reservations, obligations and covenants, and access and use. For older properties and those that are listed, it is also important to consider planning and listed building history, cross-checking those against works undertaken to the property. If you have a specific or unusual use in mind for the land, make this known to your advisers, as they will need to ensure that the specific use would be possible and if so, what might threaten it in future.
~Novel Serialisation: Heavens Fire~
For properties under construction or plot purchases, whilst the principles remain the same, it will also be necessary to consider build contracts, agent contracts and appropriate build warranty, and whether necessary collateral warranties are in place. If you are buying a site under construction, particularly with luxury properties, make sure you have guarantees and warranties in respect of mechanical and engineering equipment (including AV) in place, to safeguard against any expensive repair or replacement.
What about Stamp Duty?
Another major consideration for those purchasing new property is the increasingly complex Stamp Duty Land Tax (SDLT) regime. Seek advice on all the elements of this, including whether any reliefs are available. It is important to seek taxation advice prior to bidding for a property, so you can take likely SDLT liability into consideration when negotiating.
Who currently lives there?
For larger properties, such as landed estates, you should also seek advice on employees who care for, or occupy, the land. Some such occupation is linked to employment at the property. Clearly, it’s important to ensure that these issues are understood and dealt with before committing to an exchange of contracts.
It’s very common for us to visit properties before advising on these elements. Paperwork on a desk is a poor substitute for actual knowledge gleaned from a site visit. A lawyer’s presence at the property also helps to demonstrate that the client is taking the transaction seriously.
Good due diligence before purchasing an expensive property is paramount.. Surround yourself with good advisers on these elements, and you are on the road to creating a happy home and a sound investment.
About the Author
William Marriott is a Partner at Charles Russell Speechlys who advises on the acquisition and disposal of property and has considerable experience dealing with country houses and properties on private estates.
