A calendar showing the day 25 circled in red; our Conveyancing Solicitors in Preston discuss the CML 6 month rule.

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What is the six-month ruling when buying or selling property?

Posted on 5th December 2023

If approaching your conveyancing solicitors in Preston to buy or sell a property which has only been registered in the current proprietor’s name for six months or less, you will be advised on the six month rule.

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CML 6 month rule:

MG Legal’s conveyancing solicitors in Preston advise, the six months rule when selling property essentially stipulates that most lenders will not lend funds to potential buyers in the event that the property has been with its current owner for less than six months.

Some lenders may, however, lend in such circumstances, but as your conveyancing solicitors encounter each day, each conveyancing transaction can be unique, therefore, such circumstances would be viewed on a case by case basis with no set decision standard in this respect.

This CML 6 month rule was brought about by a high volume of mortgage fraud cases during the 1990s. During this time, there were a number of ‘back-to-back’ transactions, where properties were being purchased with very little deposit, and re-mortgaged almost instantly, with as high as 90% loan-to-value. This meant that when the 2008 crash hit, many were left with little money tied up within the property – and so were not affected in terms of financial loss, and the risk was primarily for the lenders who had originally lent the funds. Fabricated sale and purchase prices were also used as part of fraudulent transactions which were to defraud lenders of huge amounts of money.

In attempts to eliminate such risk factors affecting lenders and the monies that they provide, the six month proviso was brought into action.

Both your mortgage provider, and your conveyancing solicitors, are to act in accordance with the Council for Mortgage Lenders, otherwise known as the CML Handbook. Following previous risk factors the CML imposes strict rules which lenders and your conveyancing solicitors are to act in accordance with. There is a specific section which governs the CML six month rule – 5.1.1, which states that your conveyancing solicitor MUST report if the registered proprietor has been in ownership for less than six months.

In present matters, your conveyancing solicitors most commonly come across such issues where properties have been purchased at auction, or in cases where property is purchased, refurbished and then sold on in a short period of time for quick disposal of the same and high profit.

If you are buying a property owned for less than 6 months or selling a property within 6 months of purchase, and think this may be an issue for you, you must inform your conveyancing solicitor who can take the necessary action. It is then at the discretion of the lender as to lending the funds and whether they agree to the same; your conveyancer is simply required to report this to them and advise the client accordingly. If you are buying or selling a property owned for less than 6 months, this is certainly a factor that should be considered.

For more information on this CML 6 month rule, or in relation to any other conveyancing query, contact MG Legal and our specialist team of Preston solicitors will be delighted to assist.

Call us today on 01772 783314 or enquire online, here.