Due diligence is the work done to confirm that a property is what it appears to be. Professional buyers spend weeks on it. These are the questions any investor should be able to get answered.
The property
- Is the title registered at HM Land Registry, and is it freehold or leasehold? If leasehold, how many years remain?
- Has an independent RICS Registered Valuer valued it, and when?
- Is there a building survey, and what did it find?
- What is the Energy Performance Certificate rating, and what work would future standards require?
- Are there planning, flood, mining or contamination issues?
The income
- Who are the tenants, and on what lease or tenancy terms?
- What is the rent history, and are there arrears?
- What are the full running costs, and what reserve is held for repairs?
The structure
- Which company owns the property, and can you check it on Companies House?
- Is there a mortgage, and on what terms?
- What fees are charged, when, and by whom?
- How are major decisions made, and what are your voting rights?
- How and when can you exit?
The operator
- Is the operator, or the firm approving its promotions, authorised by the FCA? Check the FCA register.
- Who are the people behind it, and what is their professional background?
- What happens to your investment if the operator stops trading?
This guide is general information, not financial, tax or legal advice. If you are unsure whether an investment is right for you, speak to a regulated financial adviser.