Buying a property is an exciting time, be it your very first apartment, your ideal family house, or your perfect retirement or dream holiday home, but it can be fraught with pitfalls and anxious moments waiting on calls from estate agents, solicitors and mortgage brokers. Understanding the process can take away some of the stress and help you know what to expect and importantly, how much it will cost you.
The law in England and Wales is different from Scottish law with regard to buying residential property, particularly with regard to when legal obligations commence. Below we explain the conveyancing process for England and Wales with some helpful tips.
Getting the ball rolling
The conveyancing process formally begins the moment that your offer is accepted. Usually, you will have seen several properties and may even have made offers on more than one of them. In the current climate properties are in hot demand and selling well above their advertised prices, so buyers are reacting quickly, and it is not uncommon for offers to be 10-15% above the asking price. If you require a mortgage, it is therefore advisable that you have an agreement in principle from a lender and have spoken with a solicitor who can act for you in terms of doing the conveyancing, searches and so on.
Where a seller has to choose between buyers, having everything ready to go may make the difference between you getting your choice property or losing out.
A solicitor should explain their terms and conditions including their conveyancing fee or estimate for the work that will be undertaken. If you are selling and buying a property simultaneously, the fee will obviously be higher. Once you have agreed this you have “instructed” your solicitor and they should then make contact with the seller’s solicitors to introduce themselves and explain they are acting for you in the transfer of ownership of the property.
Tip: Although your offer has been accepted you are not legally bound to purchase the property at this point for the amount agreed. But be warned, neither is the seller compelled to sell to you should they change their mind or accept a higher offer later on in the process.
If you are a cash buyer searches are not required but nonetheless, they are a sensible option. If a mortgage is needed the lender will require a series of searches to be undertaken. These include:
• local authority search to get information on things you may not otherwise be aware of such as plans for development, the presence or radioactive gases in the ground and so on
• checking the title register to ensure the person you are buying from is the legal owner and entitled to sell it, i.e., maybe it is jointly owned by a husband and wife
• water searches to ascertain how the property gets its water and any public drainage networks
• environmental searches, flood risk or other site-related searches.
The searches will range in cost from £20 to £250 and may take anywhere between 48 hours and six weeks.
Tip: While you are waiting on the searches you may wish to organise a survey and get quotes on insurance.
The seller’s solicitor prepares the contract and sends a copy to your solicitor who will review it for any potential issues. The seller will be asked for other information relating to the property via a series of forms that cover for example, boundaries, parking, insurance, what fixtures and fittings are included, the Energy Performance Certificate etc.
If any issues arise your solicitor will make further enquiries and if necessary, negotiate on your behalf with the seller’s solicitor. Your solicitor will ensure you are happy and wish to proceed. You and the seller both sign copies of the contract and a completion date is fixed.
Tip: At this point the sale becomes legally binding and you must have insurance in place.
If you are buying with a mortgage your solicitor will receive the funds and will make the transfer into the seller’s solicitor’s bank account. Once the purchase price has been received and acknowledged, the property becomes legally yours and you can now arrange with the estate agent or seller to collect the keys!
Your solicitor will register the transfer of ownership with the Land Registry. Assuming the purchase price is above £125,000 (or £300,000 for first time home buyers), you need to pay stamp duty, charged in tiers from 2% to 12%, within 30 days (or interest accrues). Your solicitor will normally do this for you.
Tip: If the property will not be your primary residence, you will be charged 3% higher stamp duty.