How do Right to buys work

 

 

How do Right to buys work

It is still possible to buy your council or housing association property in England under the right to buy scheme, it can be the best way for those renting a property that is council or housing association property currently. If you live in Scotland the RTB scheme ended on the 1^st of August 2016 and in Wales it ended on 26 January 2019.

The Right to buy scheme will give you a varying discount on your council or housing association home, usually based on how long you have lived in the property or rented from them. The discount can be as much as £100,000 or more if in some London areas.

What does it all mean?

The Right to buy (“RTB”) scheme is an arrangement to allow eligible Local Authority Tenants and some Non-Charitable Housing Association Tenants the right to purchase the property they live in. It is a right as set out in the Housing Act 1980. The type of property is often houses and flats (the scheme allows for freehold and leasehold properties).

You are usually eligible to buy in England under a right to buy scheme:

It is the only property you might own if you buy (meant for first time buyer)

You rent all of the property and not just one room or part of the property.

You are classed as an eligible tenant.

Eligible tenants need to have rented for a minimum of 3 years.

What is an eligible tenant      

The Right to buy scheme is mainly for council owned homes, but can sometimes be offered by Non – Charitable housing association homes, an eligible tenant must of rented a property from the local authority for 3 consecutive years minimum ,does not have to be the same property . You must be named on the tenancy agreement solely or with a partner and in most circumstances you must be paying the rent on time and from your own source of income and not from housing benefit.

Discount amounts and discount claw back periods .

The maximum discount in England is £84,200, but £112,300 in some London Boroughs, this  increases each year in line with the consumer price index.

The discount is based on

How long you have been a tenant with the council or housing association.

The type of property you are buying house or flat

The value of your home.

 

 

 

Houses

You get a 35% discount if you’ve been a public sector tenant for between 3 and 5 years.

After 5 years, the discount goes up by 1% for every extra year you’ve been a public sector tenant, up to a maximum of 70% – or £84,200 across England and £112,300 in London boroughs (whichever is lower).

Flats

You get a 50% discount if you’ve been a public sector tenant for between 3 and 5 years.

After 5 years, the discount goes up by 2% for every extra year you’ve been a public sector tenant, up to a maximum of 70% – or £84,200 across England and £112,300 in London boroughs (whichever is lower).

You are subject to discount claw back for up to 5 years from purchase, if you sell within 5 years you will have to pay back varying amounts depending on how long you have owned into the 5 year claw back period, but you are free to sell the property after 5 years with no discount penalties at all.

Getting a mortgage on your right to buy

You are still subjected to all the same rules when getting a mortgage as another person buying a property other than the fact you might not have to pay any deposit to the mortgage lender as the discount can be enough to be used as a deposit . It might be an issue getting a mortgage if the property is a high rise or of concrete construction, you might need to approach a mortgage broker who knows the mortgage market to place the mortgage for you. Also some right to buys in can be in areas that are really expensive and even after the discount are out of the affordability range for the applicant.

Also not all lender will offer right to buy products , if you have poor credit or the right to buy is of poor construction concrete etc , you might need a niche lender to help you this might be another reason to approach a mortgage broker .

 

 

 

 

 

 

 

 

A comprehensive guide to conveyancing

 

 

 When buying or selling a house, a conveyancing legal expert is a key part to the process.  

Conveyancing can be the most complex part of moving to a new house for homeowners. Here at Versus Law we understand the frustration that can be felt when paperwork stands in the way of you purchasing or selling your home and do our best to make the experience as efficient and professional.  

What is conveyancing? 

Conveyancing is known as the legal process of transferring ownership of a property from one individual to another. It encompasses the entire body of legal-administrative work undertaken to allow for a house sale or purchase to be legally valid and the work is usually undertaken by a conveyancing solicitor. At Versus Law we deal with both commercial and residential properties.

Can I do the process independently? 

It is possible for homeowners to undertake conveyancing themselves. However, this can be extremely complicated and time consuming. It may also lead to errors being made which could open you up to legal issues down the line.  As specialists here at Versus Law, we have the expert knowledge that is needed should your transaction become complex. We cover all types of properties such as freehold and leasehold properties as well as other niche types of contracts. 

What are the costs of conveyancing?

The cost of conveyancing services vary depending on the property.  At Versus Law we have a handy calculator you can use to get a free no obligation quote.  

How long should the conveyancing process take?

On average, the process takes between eight and 12 weeks in total. However, this can vary case to case. 

Here is a breakdown of how it works: 

Phase 1: 

• Commence communication with the seller’s solicitor to attain the contract pack 
• Conduct a survey by a regulated chartered surveyor 
• Have the offer on the property accepted 
• After the valuation has taken place liaise with the mortgage lender to approve the mortgage 

Phase 2:

• Request and obtain a copy of your mortgage offer
• Carry out local authority searches

Phase 3:

• Examine the contract pack, results of local authority searches and mortgage offer
• Consider likely completion dates and negotiate a date with your seller’s conveyancing provider

Then, you will:

• Communicate with mortgage provider about most suitable completion dates
• Analyse the information, asking any questions about anything you haven’t understood 

And finally, you will sign the final contract and return it to us– your solicitors.  Once this is signed you are bound to purchase or sell the property. 

Phase 4:

• Notify the seller’s solicitor and inform them you wish to advance with the contract exchange
  

You will then:

• Send off the deposit to your conveyancing provider – us.

Phase 5:

As your conveyancing provider we will:

• Exchange signed contracts with the seller’s conveyancing provider

Send the deposit to the seller’s conveyancer

Exchange to Completion:

Phase 1:

As your conveyancing provider, we will then:

• Arrange the completion statement and send it to you
• Prepare priority searches
• Advise you about arranging building insurance

Phase 2:

Your conveyancing provider will:

• Organise the transfer deed

You will:

• Study, sign and return the transfer deed

Phase 3:

We will then:

• Send the signed transfer deed to the seller’s conveyancing solicitor
• Ask for the finances from your mortgage lender

Phase 4:

As your conveyancing provider we will then:

• Make the payment for the house to the seller’s conveyancer
• Obtain title deeds, handover deeds and proof of any unpaid mortgages you have redeemed

You will then:

• Collect the keys to your new house once given the go ahead by the seller’s solicitor
• Make the move into your new home!

Phase 5:

We will then:

• Provide the stamping office the transfer deed and any applicable stamp duty 
• Send documents to HM Land Registry to register your ownership of the property

Phase 6:

As your conveyancing provider we will then:

• Receive title deeds from HM Land Registry and send them to your mortgage lender if they have provided finance, or you if you are a cash buyer

It is important to note that although the process above is what is typically followed sometimes in the case of a complex case delays may occur.

 

Estate agents contracts

 

Estate agents contracts

It can be complicated as different estate agents can have differing contracts for selling your property, but you must be aware that an estate agents contract is a legally binding contract that you should read thoroughly and understand, any point that you don’t find clear or understand you need to ask the agent who is potentially selling your property to clarify these points.

The types of contract offered are as below.

Sole seller agreement

This contract reserves the right of the agent to sell your home exclusively during the term the contract is signed for and will even include finding a buyer in this time yourself , the Agent can insist you still pay the signed for agent fee .

Sole agency agreement

This you will find as the most common agreement offered by an agent, it can bare resemblance to the sole seller agreement, the main premise of this contract is to restrict the sale to the one agent you have signed the contract with, if you sell the property through another agent in this time you could still be liable to pay the fee of the agent you signed the sole agency agreement with. If you find your own buyer you are under no obligation to pay the sole agent their fee as it only covers selling through agents and not something you have done personally.

Multi agency agreement

With a multi agency agreement, you are free to use several agents, whoever sells your property the fee will be due to them, Agents do not like multi agency agreements and for this reason will hike the fee sometimes up to 3 times more than a sole agency agreement. Multi agency agreements are more expensive but serve a purpose if you need a quick sale and having it will multi speeds up the sale as it is being sent out to more potential buyers. Agents do not like these agreements as they spend money on advertising and marketing the property only to have it sold by another agent.

Please make sure you read through the agreements fully, refer it to the agent if you don’t understand any of the points in the agreement, and if still you are unsure refer it to a solicitor to check the terms for you. Some of the things that will be in the agreement are listed below with some explanation.

•  Tie-in period

Most estate agents will include a tie-in period for their agreement which will, typically, be around six weeks. The notice period will be between one week and four weeks. It's important that you review these details carefully because some estate agency contracts may keep you legally tied to them for up to six months.
 

• Cancellation fee

You should check the estate agent’s agreement to see whether there is a cancellation fee, which is for when you switch to another agent or if you decide to withdraw your home from the market.
 

• Marketing fees and extras

One of the issues with estate agents is that some will win business by charging what appear to be low fees but then they need to add extra costs into the agreement. This means you'll need to appreciate terms such as marketing fees and extras, as well as being charged for Energy Performance Certificates (EPC) which really should be seen as a standard cost as part of their commission.

 

Leasehold Homes

 

 

Leasehold is an ownership of a piece of land or a building for a certain period of time, when you buy a new property or piece of land that is leasehold, you are known as a lessee, you will own the land or property for the period of time stated on the lease agreement, the freeholder of the land with the use of a solicitor will draw up a lease for a specific amount of time, the freeholder can also be known as a lessor or landlord.

When buying land or property that is leasehold, the longer the lease the more valuable it is if it is resold in the future. The reason 99.9% of flats with more than one unit in a block are leasehold is due to the fact there will be communal space around the flat and one flat might be on top of another, this means its more practical for the whole building or block to be owned by a freeholder who would make arrangements for the communal areas to be looked after by a management company or if small enough by themselves as a freeholder. This means that the leaseholders would not be in constant dispute about who is responsible for looking after areas that are shared by the owners of the units. This usually means that the Freeholder or management company will levy a charge often referred to as a service charge that is payable annually to cover the cost of maintaining the communal space , this could include gardens, hallways , lighting and roof etc .

Also the freeholder has a right to charge for the ground that the leasehold property stands on and is referred to as ground rate that is mostly charged annually to the lessee. It is always advisable to make sure when buying a leasehold property that you are aware of any additional costs are levied like service charge and ground rent as you might get an unpleasant surprise as services charges can be in the 1000’s especially if a car park or gym is provided in the complex.

Also if buying in an older complex in a big block planned maintenance for the complex might be coming due , Complete roof replacement , cladding for the building , complete redecoration of hallways or replacement lifts etc that could mean huge bills being passed down to the leaseholder. Getting you solicitor to uncover this is recommended and usually is done a part of the job they do for you as standard.  Also your solicitor will look for strange clauses that affect the lease, that might be a immediate problem or a problem that will be in the near or distant future.

When buying leasehold property, if a mortgage is needed to buy the property the length of the lease will have a real baring getting the mortgage accepted, most lenders will have a minimum lease length. If you have set your heart on buying a particular property with a short lease it is possible to negotiate with the freeholder for the lease to be extended. This can be expensive depending on how greedy the freeholder is and can amount to tens of thousands.It is sometimes possible for a mortgage lender to agree to covering the cost of a lease extension if it fits within their loan to value criteria, this would mean the valuer sent by the lender will be asked to value the property taking into account the lease will be extended on completion of the purchase. This would mean that the completion and lease extension needed to be simultaneous so that the mortgage funds would be available to pay for the lease extension and the property.