Buy-to-let investors 'must not renege on purchase contracts'

by Gary Whittaker

This article was brought to you by Rentman the premium property management system.

Buy-to-let landlords have been warned that backing out of a purchase contract agreed with a property developer could leave them susceptible to litigation.

Law firm Wedlake Bell has spoken out against the misconception among many landlords that failing to complete a contracted transaction will only result in the forfeiture of their deposit.

Jeremy Raj, head of residential property at the firm, reminded buy-to-let investors that completing the deal is an obligation and that a withdrawal is likely to lead to legal action from the developer.

Mr Raj also stated that landlords should ensure they secure funding for any property transactions they agree to, even if they do hope to withdraw from the deal.

He said: "For investors the most painful scenario is that the court requires them to complete on the purchase and they have no funding in place."

This, the lawyer warned, will leave the landlord in question facing debt recovery action.

The advice comes after Arla earlier this month noted that purchasing activity in the buy-to-let market has increased during the first six months of the year.

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27-August-09Legal News