7 February 2023

Buying a property with cash

By Nic Sheldrake, Property Director, Hayes + Storr.

If you’re searching for a new home, you may have come across the term ‘cash buyers only.’ In these cases, the agent is looking to sell to someone who does not need to borrow money and can proceed quickly.

There can be distinct advantages to being a cash buyer, or selling to one, however, it is important to be clear on what this actually means.

What is a cash buyer?

A cash buyer is someone who can finance their purchase without a mortgage or selling another property. They must have enough money available to buy the property at the time they make the offer. Having proof of your funds to hand will boost your credibility and help speed up the process.

If you are selling your home, your estate agent should confirm how the proposed buyer will pay for it. Ask yours how they will verify a buyer’s status.

What are the advantages of being a cash buyer?

Cash buyers can proceed more quickly because they do not have to wait for a mortgage or for their own sale to complete. As a cash buyer, you may be able to negotiate a lower price or negotiate other benefits.

Cash buyers will also find it easier to buy at auction or buy properties considered unmortgageable, for example, ones of non-standard construction or which have structural or title problems.

Keeping you and your investment safe

All sellers and buyers must provide proof of their identity and address to comply with anti-money laundering regulations. The requirements will depend upon your solicitor and whether you are meeting them face-to-face. You should have your current passport or photocard driving licence and a recent council tax or utility bill available as this will help avoid delay.

As a purchaser you will need to show the source of your funds not only to the agents but also your solicitor who will need to confirm your funds are from a legitimate source. This is to comply with legislation aimed at reducing criminal activity. For example, if you are funding your purchase from savings, they will ask to see bank statements showing regular payments into your account and your savings building up.

Due diligence
Cash buyers should be wary of any pressure to complete before they are ready. Be cautious about dispensing with any of the recommended searches or investigations into title. Your solicitor can advise you of the risks involved and if necessary, ways of mitigating this, for example by taking out indemnity insurance.

Be wary of so-called buy any property companies, which regularly advertise on the internet or in local media. While some are genuine, others are only middlemen for third party investors. Others may use dubious tactics such as making an initial high offer then reducing it before the sale goes through.

How we can help

For further information on any aspect of the home buying process, please contact Nic Sheldrake in the residential property team on 01328 863231 or email nic.sheldrake@hayes-storr.com.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.