Conveyancing is the legal process of buying and selling property. If you’re a first time buyer here in the UK, it can literally be like talking in a foreign language. Here are the 10 most important things you’ll need to know before you find a property and place an offer:
- Find a conveyancing solicitor – it is vital to have someone with the necessary expertise and experience to identify and resolve the potential issues, offer you advice and reassurance, and with the resources to keep to a minimum the period between the memorandum of sale to exchange of contracts. The firm should ideally be part of the Law Society’s Conveyancing Quality Scheme and listed on the panels of most lenders. This is an area in which one really should not skimp on costs as you almost invariably get what you pay for – which includes the time necessary for your solicitor to do the job properly! Most solicitors will work to a fixed fee but make sure that there are no hidden extras when you receive their estimate of costs.
- Is the property OK? – where you wish to live will depend on a number of factors such as proximity to workplace, schools, parks, transport links, shopping areas, sports facilities, entertainment, hospitals etc. It also depends on how long you are planning to live there before moving on. Wherever it is, it is crucial that your solicitor carries out all necessary searches such as local authority, drainage, environmental, flooding, chancel, etc. and highlights any potential issues
- House or Flat? – a freehold house will provide more independence than a flat where you will need to work with a landlord or management company in order to arrange any repairs and address any other issues relating to the block. If it is a flat, you will need to ensure that the lease has at least 80 years left to run or you may want to factor into the purchase price the premium to be paid for extending it. You’ll also need to ensure that the appropriate notice is served by the seller before completion to enable you to extend the lease as the new owner (you will otherwise have two years to wait). Your solicitor will provide you with a detailed summary of the lease terms in their Report on Title so that you are clear about your rights and responsibilities.
- Mortgage – it is important to start the application process in good time so that you are clear about the extent of borrowing available to determine your budget and so that once you find a property you are able to move relatively quickly with a survey and formal offer. You will not normally be able to exchange contracts without a mortgage offer in place.
- The Offer – once you have found a suitable property you will need to make a formal offer to buy via the seller’s estate agent. A sum below the asking price is often acceptable but this will depend on how long the property has been on the market, any competing bids from other buyers, and how determined you are to acquire this particular property. Once accepted by the seller, the agent will draw up a memorandum of sale, but it is important to appreciate that this will remain “subject to contract” until contracts are exchanged.
- Survey – once your offer is accepted, it is advisable to have a Homebuyer or Building (structural) survey, particularly for a freehold property but it can also be important for a leasehold property, for example, in identifying any non-compliant alterations. The survey will reveal any problems and potential repair costs which if significant can lead to an appropriate reduction in the purchase price. Your mortgage lender will require a basic valuation survey and sometimes provides an option to upgrade this to a Homebuyer survey (at your own cost).
- Additional Enquiries – forms are provided by the seller (and for leasehold, the managing agent) with replies to standard enquiries. Your solicitor will raise any further enquiries that may be appropriate based on the information provided. You will need to ensure that the plan of the property reflects the position of boundaries on the ground, and if leasehold, the layout of the flat to ensure that there have been no unauthorised alterations. You should also check the Fittings and Contents list to ensure that the sale includes everything you’ve agreed with the seller. This is your opportunity to get involved in understanding the issues relating to the property and in suggesting any particular enquiries of your own, such as, what are relations like with the neighbours (particularly important in a block of flats), has there ever been an invasion by vermin, etc.
- Funds – you will need to ensure that you will be able to provide your solicitor will the full amount of the purchase price (less any mortgage advance) including stamp duty and other legal costs, prior to the date of completion. You should be aware of the higher rate of stamp duty (an additional 3%) payable if you are buying an additional property unless it is as a replacement for your existing home.
- Exchange of Contracts – 10% deposit is usually payable on exchange – unless there is a particularly long delay before completion in which case a smaller deposit may be acceptable. This is the point at which everyone is legally bound to the deal (until this point it is in principle only), and can relax and plan ahead with certainty. The completion date needs to be agreed at this point and a removal company booked.
- Completion – this should be a formality with funds being transferred to the seller’s solicitor’s account, keys being released via the agents. Midday is usually the deadline, which means you should be able to move into your new home by early afternoon on the same day.
This article was written by George Cselko from Fletcher Day Solicitors – one of my tried and trusted contacts. For further details, he can be contacted via the Fletcher Day website (George Cselko)