Roundtrip transaction costs moderate in Britain, can be high on high-end properties

How difficult is the property purchase process in the UK?

There are no restrictions on foreign ownership.

Buying property

Buying property in UK can be summarized in 3 stages: the search and offer, conveyancing and the final touches.

1. Find a suitable property and make an offer, usually through your real estate agent. The offer does not legally bind you to buy, except in Scotland where offers ARE binding (neither is the seller legally bound at this stage – ‘gazumping’ or withdrawing from an agreement to buy or sell before the final contract has been signed is very common, except in Scotland).

2. After your offer has been accepted you may wish to arrange for a survey. A survey is strongly advised for early detection of potential problems. Generally there are two kinds of survey:

• a building survey, which will cost you roughly £500 (€369) to £1,000 (€739)
• a homebuyer’s report, which will be cheaper at about £300 (€222) to £500 (€369)

There are no set fees for surveys. Negotiate.

3. The legal transfer of the property (conveyancing) is the next stage. You will need a solicitor or a licensed conveyor for this. Again, there is no set fee scale so negotiate, and clarify whether VAT and/or disbursements is/are included in the upfront quotation. Conveyancing proceeds through an exchange of notes between the seller’s solicitor and your solicitor. A “draft contract” will be drawn up by the seller’s solicitor containing the price, information about the seller’s deeds of title, etc.

Your solicitor will check this and negotiate with the seller’s solicitor. Searches, enquiries and surveys undertaken on your behalf will include a Local Authority Search, to check that the property is not in the way of any project; a search at the Land Registry to check security of title. Other enquiries will check on things like mineral rights, flooding, pollution, etc. This part of the conveyancing process will take a minimum of two weeks, but it not unusually takes two or three months.

4. Once you and your solicitor are satisfied, you sign final contracts. This binds both parties legally - the sale must go through. At this point you hand over a non-refundable 10% deposit.

5. A transfer contract documenting the transfer of title will next be prepared and signed by both parties. A completion date will also be agreed upon. Between the contract signing and completion date, proper arrangements with the Land Registry office are made: stamp duty and other fees connected with registering are paid. Payments are now completed and the deeds are handed to you. The process is over, you are now a proud owner.

Selling a property

A Home Information Pack (HIP) must now be provided before properties in England and Wales can be put on the open market for sale with vacant possession (Housing Act 2004). The idea is to reduce the (large) number of abortive sales in England and Wales (28% of all ‘agreed’ sales fail to take place) and is based on Danish practice.

The pack must be no more than three months old when the property is first marketed, and must contain:

• An energy Performance Certificate
• A sale statement
• A copy of the title documents for the property
• Local Authority and drainage searches
• An index

If the property is leasehold or commonhold, then the pack must also include the following:

• A copy of the lease
• Building insurance policy
• Contact details for the landlord or management and any legal details
• Regulations that apply
• Recent service charge receipts and accounts

The initial idea was to include a Home Condition Report, to reduce the cost burdens on buyers, but this was not implemented. Failure to provide a Home Information Pack, or supplying an incomplete pack carries a fine of £200 (€148).

Home Information Packs should cost between £300 (€222) to £600 (€444) for most properties in England and Wales. Some estate agents are offering HIPs for free, however the Law Society recommends you use independent HIP providers, to avoid being tied in or triggering penalty clauses.

If you are looking to buy property in Scotland these are the steps:

1. hunt for the desired property
2. hire a solicitor
3. arrange the survey
4. make the offer, if the offer is accepted you are then legally bound to complete the transfer. This ensures financial reimbursement should the seller or buyer suddenly back-out in the middle of a transaction. A buyer receives payment to cover for survey and valuation costs. The seller receives compensation for lost interest and other costs.
5. go on with the conveyancing, if there no problems
6. contracts are then signed
7. money and deeds and keys are exchanged

The components of each step are generally similar to the processes in practice in the rest of the UK.

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Footnotes to Transaction Costs Table

The round trip transaction costs include all costs of buying and then re-selling a property – lawyers’ fees, notaries’ fees, registration fees, taxes, agents’ fees, etc.

Legal Fees:
Solicitors and conveyancers fees are based on the amount of time spent on the transaction. It is generally negotiable and varies a lot. Others charge a fixed amount while others charge a percentage of the sale price (around 0.5% to 1%).

Stamp Duty:
The buyer must complete, sign, and lodge a Land Transaction Return together with the Stamp Duty Land Tax (SDLT) within 30 days of completion. Some areas of the country are exempt from stamp duty. The Inland Revenue website (http://www.hmrc.gov.uk/so/buy-house.htm) has a list of stamp duty exempt areas.

Stamp duty is determined as follows:

STAMP DUTY ON RESIDENTIAL PROPERTIES
PROPERTY VALUE, £ (€)	RATE
Up to 125,000 (€100,000)	0%
125,000 – 250,000 (€200,000)	1%
250,000 – 500,000 (€400,000)	3%
500,000 – 1 million (€800,000)	4%
1 million – 2 million (€1,600,000)	5%
Over 2 million (€1,600,000)	7%

STAMP DUTY ON NON-RESIDENTIAL ANDMIXED-USE PROPERTIES
PROPERTY VALUE, £ (€)	RATE
Up to 125,000 (€100,000)	0%
125,000 – 250,000 (€200,000)	1%
250,000 – 500,000 (€400,000)	3%
Over 500,000 (€400,000)	4%

Land Registration Fee
Land registration fee is around 0.05% of the property value.

LAND REGISTRATION FEE
PROPERTY VALUE, £ (€)	RATE
Up to 50,000 (€40,000)	40 (€32)
50,000 – 80,000 (€64,000)	70 (€56)
80,000 – 100,000 (€80,000)	120 (€96)
100,000 – 200,000 (€160,000)	190 (€152)
200,000 – 500,000 (€400,000)	270 (€216)
500,000 – 1 million (€800,000)	540 (€432)
Over 1 million (€800,000)	910 (€728)

Real Estate Agent’s Fee:
Real estate agent fees are generally negotiable. The commission is typically lower if there is only one estate agency involved. In cases of multiple agency agreement, where several estate agents compete to sell your house, agent´s fees are typically higher. VAT of 17.5% is imposed on agent´s commission.

THE NEW UK 5P PLASTIC BAG CHARGE

The English Government introducing a charge of 5p for a plastic bag has caused a frenzy. English people are well known for loving a freebie and have said that they are going to protest about the charge by doing a full shop, putting it through the checkout, refusing to pay for bags and leaving the trolley full of shopping behind![1] Supermarkets are even bracing themselves for hundreds of thousands of metal baskets being stolen as shoppers carry their items out in these instead of bags. But there is a reason for the expense. Wales introduced the 5p charge on 1st October 2011 and it has helped reduce the single use carrier bag use by 71%. Carrier bags are made of oil based plastic, a non-renewable resource, meaning that a bag can take up to 500-1000 years to decompose, and may not ever break-down. Many of these bags end up as litter with 86% of single use carrier bags end-up in landfill[2]. Carrier bags coupled with other non-recyclable rubbish fill up our landfill resulting in situations like the waste site in the small village of Great Heck in North Yorkshire. Just meters away from the villager’s homes is a 10,000 tonne site piled 50ft high with smouldering rubbish, which residents say omits a horrific smell, making them and their families ill. Children in the nearby school wear masks when playing outside and Sarah Webster who lives just 200 yards away from the tip has been advised by a consultant at hospital to get away from the area when her and her family were hospitalised after being gravelly unwell. Sarah said: ‘(The tip) smells absolutely vile. It’s toxic and can often smell of burning plastic, which is a known carcinogenic.  I've lived here all my life. Even if I was looking to move now to get away from this I couldn't as it would be impossible to sell the property.’[3] The tip was run by Wagstaff Total Waste Management Ltd but they have gone into liquidation leaving the rotting rubbish to fester and self-combust, which has been estimated at costing £1million to clear away. The Environment Agency have made arrests but even with Selby MP Nigel Adams involved who knows how long it will take to eventually clear and at what cost to the residents health. [1] http://www.bbc.co.uk/newsbeat/article/34443310/plastic-bag-charge-five-of-the-most-english-reactions [2] http://www.carrierbagchargewales.gov.uk/consumers/?lang=en [3] http://www.dailymail.co.uk/news/article-3261667/Mother-says-children-ill-awful-pungent-smell-10-000-tonnes-smouldering-rubbish-left-rotting-tip-company-went-bust.html

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What is a HomeBuyers Report? Get the facts on what a HomeBuyer Report includes.

What is a HomeBuyer Report?

The HomeBuyer Report, previously known as the Homebuyers Survey and Valuation (HSV) and often still referred to as a Homebuyers Survey, was introduced in 2009 and is completed within a standard format as laid down by the Royal Institution of Chartered Surveyors (RICS).

The HomeBuyer Report is recommended for conventional, newer homes, which are in reasonable condition. It is the most frequently undertaken survey which provides a more in depth report of the condition of the property and will give you professional advice to allow you to make an informed decision of whether to go ahead with buying a property.

The HomeBuyer Report will not detail every single aspect of the building, but it does spotlight urgent matters that have a substantial effect on the value of the property and need attending to or further investigation. It will include all major sections of a property that are visible to the surveyor, so they will not lift up floors or carpets and wiring will not be included.

HomeBuyer Reports are completed by RICS Chartered Surveyors. To get the expert and independent advice a Chartered Surveyor can offer, you can compare quotes from professional and experienced surveyors here at reallymoving.com.
 
If you have a property that is in need of renovation or that you intend to alter, we recommend you commission the more comprehensive Building Survey from a RICS Chartered Surveyor.
 

 

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Receive free instant quotes from Chartered Surveyors

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What is included in a HomeBuyer Report?

The HomeBuyer Report includes details of:

• A current valuation of the property as for the open market.
• Background information on the property and location.
• An estimate for the cost of re-building the property for insurance purpose.
• An assessment of any damp-proofing, drainage or insulation in the building. Drains are not tested.
• Condition of the building’s timbers and checking woodworm or rot.
• Damp test results taken from the walls.
• Details of urgent problems which should receive specialist attention before signing a contract.
• Details of major faults in easy to get to parts of the property that may affect its value.

Although a summary of the survey will be present at the front of the report and a reminder of the urgent repairs will be at the end, it is always worth reading the report in full. The HomeBuyer Report is easily understood - written in plain English rather than technical jargon.

Condition Ratings

The RICS HomeBuyer Report has 3 condition ratings to evaluate and describe the condition of the property and how urgently it needs repairing. The conditions are defined by RICS as:

• Condition Rating 1 – no repair currently needed.
• Condition Rating 2 – defects that need repairing or replacing but are not considered to be serious or urgent.
• Condition Rating 3 – defects that are serious and/or need to be repaired, replaced or investigated urgently.

If a surveyor reports findings that may be costly to remedy it can allow for the reopening of negotiations with the house seller on the price or you may wish to rethink your purchase of that property.

By comparing quotes from surveyors for a HomeBuyer Report you can get a professional inspection at a cost-effective price, as the trained eye of a surveyor will spot those potential issues that you would not be aware of. All of the surveyors on reallymoving.com are regulated by the Royal Institution of Chartered Surveyors.

Here is our directory of Chartered Surveyors on reallymoving.com.

 

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Comments

• Sheila Bonnick says...

  posted on 05/12/2013 14:14:58
  This service looks good.

• Mark Emmingham says...

  posted on 20/01/2014 22:06:01
  Very very useful

• Peter Collett says...

  posted on 11/10/2014 08:31:26
  I'd be very careful about a Homebuyers Report. Mine failed to notice there was no hot water provision in the house I was buying, owing to an unworking back boiler (despite the report stating hot water was supplied by a back boiler; a quick look would have shown the thing was not working and had not been working for some time), and that a chimney needs demolishing urgently as it is leaking water into the broken back boiler. With this in mind, the valuation was significantly overestimated (local estate agents advise by about £10-15,000). I for one would never use one of these again, except for a very modern property.

• Frederick & Sheila Wood. says...

  posted on 06/12/2014 20:31:28
  Report very understandable.

• Mark Hatton says...

  posted on 20/02/2015 15:32:03
  We have now had two homebuyers' reports and neither has been useful. Sounds good in principle, until you realise that a scale of 1-3 is not adequate, and that surveyors rate most things a 3 and tell you that you should get someone to do a separate inspection of the problem. For example, our first one was for a flat with a communal area. They rated the communal area a 3 as they claimed it needed re-decorating. On our most recent, the sealant around the bath was rated a 3 (along with the very dodgy electrics!). THese things make it very difficult to judge what is actually an "urgent" problem. I suggest you get the cheapest option and then pay a decent builder for an hour to come and walk round the house with you!

Let us know what you think

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Site surveys
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These are also known as root barriers, these are a physical barrier protecting a structure or site from Japanese Knotweed infestation. These can be used for cell burial, stock pile formation and other burial methods.
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By using innovative plant that has been tailored for the purpose, we have been able to keep the cost of this methodology to below that of existing mechanical techniques, which along with the Government’s Tax advantages on in-situ treatment has allowed us to create a new market segment between herbicide spraying and the more traditional but expensive ‘dig and dump’ remediation.

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On occasions there is no other option on a development site apart from removing the Japanese Knotweed contaminated soil from site and disposing in an authorised landfill. ECS are able to provide resources including watching briefs to reduce the amount of material going to landfill by up to 60% therefore greatly reducing costs. ECS are also able to supply all plant, transportation and disposal of the controlled waste therefore offering the client a complete package.
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Where the site conditions allow an on site burial strategy may be possible. This involves placing the Japanese Knotweed contaminated material at least 5m below the final ground level and capping it with clean material.
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Japanese Knotweed Onsite burial is a fast cost effective method of dealing with Japanese Knotweed Infestations. The constraints to this methodology are site size, water levels and area of development. Within the cell burial programme a pit is dug and lined with a geotextile membrane. All joints within the cell are welded closed. The Japanese Knotweed is then excavated under the direction of a highly experienced ECS clerk of works. This is then capped with a cover of geotextile membrane and welded shut, thus creating “The Cell”. A cover of soil is then placed on top of the cell to a depth of approximately 2 metres. This solution is perfect for areas of sites that are not to be piled or built on. Historically clients have built car parks on top of the cells. This Japanese Knotweed control method is covered by the ECS 10 year insurance backed guarantee.
Remove Japanese Knotweed - On-site Translocation
Soil can be excavated from the contaminated area and moved to a more convenient area on the site where it can be stockpiled on a geo-textile membrane where the Japanese Knotweedcan be allowed to grow normally then herbicidally treated. Once eradication has been completed the soil can then be reintroduced and used normally on the site. This method reduces the environmental and economic problems of the dig and dump strategy.
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Unlike traditional Japanese Knotweed herbicidal treatment methods which are applied to the surface of the leaves of the plant, stem injection targets the application of a controlled quantity of herbicide directly into the core of the plant. This direct targeting of the herbicidal application enables stem injection to be the least insidious method of eradication of Japanese Knotweed.
Stem injection is not weather dependant - traditional spraying methods are severely compromised by weather conditions and can not be applied during heavy winds or rain.
Stem injection can 100% be safely applied in an area where TPO’s (Tree Preservation Orders) have been issued - traditional spraying and mechanical removal methods are not suitable, and will result in severe damage.
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Stem injection is accepted and authorised by the E.A. to use on organic approved farms, without causing the loss of their organic status. Due to the labour intensiveness of stem injecting it is really on used on smaller sites or site that carry environmental issues for example water courses and TPO's.

Eco Control are specialists in the treatment of invasive weeds, invasive weed control, Japanese knotweed eradication and Japanese knotweed control and management solutions.

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Transparency and Disclosure Requirements in respect of Referral Fees in Conveyancing Transactions

Following the Law Society pushing for a ban on all referral fees for all practice areas, after the ban on referral fees in respect of PI work was approved, the CLC made an application via consultation to the Legal Services Board (in April/May 2013) not to allow an outright ban in terms of referral fees in respect of conveyancing transactions.

The LSB during its research found that by allowing referral fees in conveyancing transactions will be an insignificant risk and there was no real detriment to the client.

However, in approving this, the LSB agreed with CLC in terms of additional disclosure and transparency requirements when dealing with referral fees in conveyancing transactions.

Previously law firms had to advise the client that there was a referral arrangement in place and the amount that would be paid to the referrer/introducer.

However, during its review, the CLC determined that the biggest threat to the consumer interest posed by referral arrangements was the level and timing of information given to consumers.

As a result, the new mandatory transparency and disclosure requirements are that:

• Agreements with third-party referrers should be in writing and subject to periodic review (as determined by the firm);
• Clients should be informed in writing of the arrangement’s existence no later than when accepting instructions, or when introducing a client to another person;
• Clients should be advised they have a choice of provider; and
• The client should be informed of the nature of the arrangement (including any payment made), with whom it is made, and any impact (including any legal costs they are charged).

So, what does the requirement of advising clients in terms of the fact that they have a choice of service provider actually entail and what obligations does a conveyance have in discharging this onus and fulfilling this requirement-

The Legal Services Board in making their final decision and whilst delivering their final verdict said :-“Clients must be told how they are affected in monetary and other terms by the arrangement”.They will also be told of “any restriction or limitation affecting the introduction” and of their right to shop around.”

So in other words, if a Firm has arrangements in place with a specific introducer/referrer that will say compel the use of a certain providers in relation to that specific conveyancing transaction, for example, to use a specific search company for instance, then that is part of the restrictions/limitations that the client must be made aware of in the CCL, at client instruction stages.

Ultimately, the client must be advised of any limitations/restrictions, in writing, at client take on stage, in terms of any specific limitations/restrictions/arrangements contained in written referral agreements between the Firm and any Introducer/Referrer, which will affect the client, in any manner whatsoever, during their conveyancing transaction.

For example, a conveyancing firm has an arrangement in place via a Panel Manager for the use of specific providers in a conveyancing transaction, eg, to use a specific search company, then the client must be advised that this is the case and by signing and returning the CCL for instance, the client is accepting this arrangement but the client must be told as they must have the choice whether they wish to go along with it or not.ie: the client makes an informed decision. In this way the conveyancer will be complying with the mandatory outcome of “acting in the best interests of the client”

The Conveyancer does not have to give the client various options in terms of different providers (for eg, different search provider companies)- The obligation is just to advise the client in terms of any specific restrictions/limitations that will either directly/indirectly affect the client because of an already existing referral arrangement. Then the client can choose, after being informed if he/she still wants to go with the existing conveyance (having considered the limitations/restrictions) or if he/she wants to choose an alternative service provider.
Licensed conveyancers will now have three months to comply with the new arrangements.

Loschinee Naidoo – Legal Eye Ltd
12 August 2013

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