How to decide whether to buy a house or build one

 

 

With 2022 seeing average UK house prices exceeding £260,000 for the first time, many people are exploring the possibility of building their own home.

While both buying and building come with their advantages, it’s worth knowing the downfalls of both sides.

This guest blog by Martha Lott, senior digital content executive with CompareMyMove.com, explores both options, examining:

• the costs
• timescales
• advantages and disadvantages

Read on and then you will be able to weigh up your options.

Buying a Home

Buying a house comes with costs, many of which people forget to factor in. Below we will explore the costs, timescale, advantages and disadvantages that come with buying a house.

The costs

• Deposit – You’ll need at least a 10% deposit to buy a house with a mortgage. This will usually be 10% of the property’s value but can sometimes be more.
• Conveyancing fees – Conveyancing costs for the average UK house price are £1,040 but will vary depending on property value, location and difficulty of your conveyancing case.
• Surveying fees – You’ll need to factor in property survey costs when buying a house. Survey fees will cost anywhere between £290-£1,390 depending on the value of the house, location and type of survey.

• Removal costs – Don’t forget to factor in your removal company cost by booking in advance. You’ll also avoid disappointment as they fill up quickly during summer, which is peak time.
• Mortgage fees – You usually will have to pay a fee when taking out a mortgage which is, on average, between £200-£1,000. If you’re using a mortgage broker, they will require a fee of between £300-600.
• Stamp duty – You’ll have to pay Stamp Duty in England and Northern Ireland; Land and Buildings Transaction Tax in Scotland and Land Transaction Tax in Wales within 30 days of completion. If you’re a first-time buyer, you’ll pay 5% Stamp Duty if the property is over £300,000 in England.

The timescale

• Apply for a mortgage in principle – You should have a mortgage in principle in place when viewing properties as it makes you a serious buyer. Many estate agents will ask for your mortgage in principle once your offer has been accepted.
• Instruct a conveyancer – Once your offer has been accepted, you can instruct your conveyancer to begin.
• Conveyancer orders searches – Your conveyancing solicitor will order searches early on in the process as these can take a while to be returned, depending on your local council. This typically takes between 3-6 weeks.
• Get a property survey – While waiting for search results, you should get a property survey to reveal any hidden defects the property may have.
• Exchange contracts – Exchanging contracts typically happens between 1-3 weeks after your searches have been returned.
• Completion day – Completion usually happens 1-2 weeks after you’ve exchanged contracts, and this is the day you’ll move in.

The timescale

• Apply for a mortgage in principle – You should have a mortgage in principle in place when viewing properties as it makes you a serious buyer. Many estate agents will ask for your mortgage in principle once your offer has been accepted.
• Instruct a conveyancer – Once your offer has been accepted, you can instruct your conveyancer to begin.
• Conveyancer orders searches – Your conveyancing solicitor will order searches early on in the process as these can take a while to be returned, depending on your local council. This typically takes between 3-6 weeks.
• Get a property survey – While waiting for search results, you should get a property survey to reveal any hidden defects the property may have.
• Exchange contracts – Exchanging contracts typically happens between 1-3 weeks after your searches have been returned.
• Completion day – Completion usually happens 1-2 weeks after you’ve exchanged contracts, and this is the day you’ll move in.

Advantages of buying a home

• You can take out a mortgage, so you don’t need the money upfront
• You can find affordable property in the right location
• The process is generally quicker
• There are more housing options available than plots to buy

Disadvantages of buying a home

• You must pay Stamp Duty
• You’re not as in control as you are with building a home
• You can’t pick and choose your building materials
• Energy bills are expensive, with only 40% of homes meeting energy standards

Building a Home

Building your own home will mean your house is truly unique, but it’s not a feasible option for everyone. The biggest argument against building a home is the higher costs and longer timescale. Below we will break down the costs, timescale, advantages and disadvantages of building your own home.

The costs

• According to Urban, the average cost to build a 2-bedroom house in the UK is between £187,625 and £281,437, however, there are many factors to consider on top of the cost of the plot.
• Plot fees – UK plot fees can cost anywhere between £1,00 to £3,000 per m² depending on location.
• Planning permission – You’ll need to apply for planning permission and will have to submit detailed building drawings to secure approved building regulations. This will cost roughly £400.
• Land survey costs – Land survey costs vary between £400 to £600 and will ensure the land is safe to build on. They’ll look at flood risks and any issues with trees nearby.
• Substructure – The type of foundations and drains needed will depend on the condition of the ground and your planning permissions, but average at £150 per m².
• Superstructure – This will be the biggest cost involved with building a home and includes the external and internal walls, external cladding, roof structure, etc. This typically costs £550 per m².
• Architect fees – The cost for the architect’s designs will be between 5% to 15% of the total cost and will vary depending on the complexity and size of the project.
• Services and fit – central heating, plumbing, ventilation as well as fitting kitchen and bathroom, tiles etc.

The timescale

It takes about a year to build a house if everything goes to plan. Many people find it takes longer than this, as there is currently a waiting time for building materials and there may well be mix-ups and delays over orders. 

Advantages of building a home

Your home will be unique

You choose the materials and features

If you stick to a budget, it can be cheaper than buying

You can design your home to be eco-friendly to save on energy bills

Disadvantages of building a home

Extreme weather can affect progress

Delays or shortages of building materials can affect the entire process

Could experience issues with cash-flow

Getting a mortgage is difficult, so you’ll need the money ready

Labour costs are expensive

Should I Buy My New Home Before I Sell My Current One

 

When you’re selling your home it’s likely that your ideal situation would be to sell it quickly after putting it on the market.

15 March 2022

However, this is not always the case and if you find a home you want to purchase before you secure your sale what are your options?

Can you buy a new house before you sell your old one?

Are You Allowed to Buy a House before Selling the Old One?

Buying and selling a property can be time consuming and stressful especially if you are in a chain. 

If your next purchase is dependent on the finances being released from your current property you will need to sell it before you can complete on the purchase of your new home. This doesn’t mean you can’t look and put an offer in on your next home but the transactions will be tied together so your current sale and on-going purchase happen at the same time. 

If you are in a financial position where you do not need to sell your current property before buying, then yes you can press on with the purchase. In this case you might be considered a more desirable buyer as you won’t be tied to a chain. 

You do need to consider some downsides. Your purchase will be classified as a second home, so you might have to pay higher stamp duty. Additionally, you’ll have to pay capital gains tax on the new house. And lastly, you have to make sure that you have the financial ability to take out a second mortgage.

Should I Wait to Sell before Buying?

On the flip side, you can also sell your house first before purchasing a new one. However, you should ensure you have somewhere to temporarily stay before you acquire a new home.

The advantage of this decision is that you can take time to find the perfect home for you. There won’t be an onward chain that will pressure you to sell your home, which can appeal to prospective buyers. Overall, the reduction of stress in balancing buying and selling at the same time will also make the process much more manageable for you and your family.

However, aside from the stress of finding temporary accommodation, you must also be ready for the disruption in your day-to-day activities and in effect 2 moves!

7 steps to buying a property

 

 

I’ve agreed to buy my first home – what happens next?

Moving house is stressful for everyone, no matter now experienced you are. To demystify the process, I’ve broken a typical purchase down into seven simple steps, outlining what has to be achieved before you can collect the keys.

Step one: Instructing a solicitor

Once you’ve agreed to purchase a property, you need a legal adviser to act on your behalf.

After settling on a firm of solicitors, you will be asked to complete instruction forms and provide documentation that proves your identity and that funds are available, to comply with money laundering regulations. You will also be asked to make a payment on account to cover the necessary searches on the property.

This is the point at which you would look to instruct an independent survey, if required and your advisor can give you more information about how to proceed. If you are buying the house with a mortgage, this is also the time to make the full application.

Step two: Receiving the contract

Once you have instructed a legal advisor, they will receive documentation in respect of the house you are buying from the sellers’ solicitor. This is known as the draft contract pack and includes protocol forms – the answers to specific questions about the property and what is to remain there on completion, along with a copy of the official title.

Step three: Raising enquiries

After the contract pack has been received, your solicitor will investigate the property’s title, raise any enquiries with the sellers’ solicitor, based on the information provided and apply for your searches. At this point, they would also want to receive a copy of your mortgage offer.

Step four: Report results

You will receive a legal report that covers information about the property, the results of your searches and your mortgage offer. It will outline everything you need to know and any issues that have arisen, together with the obligations imposed on you by the lender, in order for the purchase to proceed.

Step five: Signing the contract

You will be asked to sign the appropriate paperwork i.e. the contract, transfer deed and mortgage deed (if appropriate) and return it to your solicitor.

Step six: Exchanging contracts

Once everything is in place and has been sent back to the sellers’ solicitor, your legal advisor will look to exchange contracts on your behalf.

This is the point when the transaction becomes binding and a completion date can be fixed. It is also the time to insure the property.

The completion date needs to be agreed by all parties in your chain, so everything must be in place for exchange to go ahead. You are then legally committed to proceed with the purchase and complete on the agreed date.

Step seven: Completion

This is the day you’ve been working towards! Money will be transferred between parties in your chain and you become the new legal owner of your property. Once completion has been confirmed, you will be able to collect your keys and move in.

After legal completion, your solicitor needs to pay any stamp duty to the Inland Revenue and lodge your details with the Land Registry. You and your mortgage lender will then receive copies of the Completed Registration.

As you can see, there is a plethora of paperwork to wade through and investigations to carry out before you can proceed with the purchase of a property. This can cause frustrating delays, but your solicitor will keep you updated throughout and let you know when milestones are reached.

 

Buying a property at auction explained

 

 

A house I like is going to be auctioned. How do I go about making a bid and what should I look out for?

Buying property at auction is becoming increasingly popular, due to the shortage of homes for sale. If you are new to the process, you should do your research before placing a bid to ensure you understand the commitment you are making.

You will need to instruct a solicitor in advance of the auction who can review the sale pack, which includes the property’s title deeds and usually, up to date searches. This means you are potentially incurring costs on a house you do not buy. Your solicitor will give you a report and details of any queries or questions you should raise at the start of the auction, before bidding begins.

If you are successful, you are legally committed to the purchase, so it is worth the initial expense to ensure there are no nasty surprises awaiting you. Contracts will be exchanged at the auction and a completion date set, normally 28 days later.

You will need to contact your solicitor again after the auction, so they can deal with the completion procedure and the necessary documentation to transfer legal ownership of the property to you. They will also arrange for any stamp duty to be paid to the Inland Revenue.

How do I fund an auction property?

You must make sure you have funding in place before attending the auction, as you are legally bound to proceed with the purchase if your bid is successful.

As you will be expected to complete so quickly, there isn’t time to put a regular mortgage in place, so if you don’t have cash in the bank, you will require alternative borrowing.

You will be asked to pay a 10% deposit on the day of the auction, which means you need to have cleared funds ready to draw down.

Should I consider selling a property at auction? 

You may find an auction is a suitable option for selling a property, if speed is of the essence. For example, a quick turnaround is often advantageous when disposing of a deceased estate.

As before, you will need to instruct a solicitor before the auction to prepare the legal pack. You may have to pay for searches up front, but it is normal practice for these costs to be recovered from the buyer on completion.

As the buyer cannot raise enquiries after the sale has been agreed and contracts are exchanged, there should be no delays in the transaction. However, the downside is you could end up with a lower offer for the property than you would have achieved on the open market.

Remortgaging: What It Is and How It Works

 

 

You must have heard of remortgaging and how it can help you save hundreds of pounds. But what is it exactly? Not many people are aware of how remortgaging works, so few people are actually able to take advantage of its benefits.

09 February 2022

In this post, Conveyancing Expert - a trusted conveyancer in Manchester, shares some of the basic information you need to know about remortgaging, including why you should do it and how it works. If this is something you’re interested in, read on, and you’ll definitely find the answers to your remortgaging questions: 

“Why Should I Remortgage?”

When you first get your mortgage, it’s likely that what you’ve signed up for was a really good deal. The problem is, over time, the mortgage market goes through many changes. Newer and much better deals are now available. What that means is that it’s likely that there’s one that can benefit you better today and save you some money. 

Here are some of the reasons why you might want to remortgage: 

To Get a Better Interest Rate

When you take out a new mortgage, you’ll likely be given an introductory deal which will be a low fixed rate or a low tracker rate for several years. Such deals often last for two to five years, depending on the offer of the lender. When that introductory period ends, it’s a good idea to check the market to find out if switching will save you some money. 

To Get a More Flexible Deal

Remortgaging may offer a more flexible deal, like when you want to overpay. You can also do it to switch to a current account mortgage, where you can use your savings to minimize the amount of interest you need to pay. Some even allow you to draw your savings back should you need them. 

To Consolidate Debt

If you have a lot of debt, it might be tempting to borrow the extra money so you can pay off other debts. But even if mortgage interest rates are usually lower than that of a personal loan and significantly lower than credit cards, you might still end up having to pay more overall, especially because it’s going to be a long-term one. 

“Do I Need to Change My Lender?”

Not necessarily. To know for sure if there’s a need to change lenders, you should check with your current one if there’s any arrangement they can offer you. You can ask about the product fees they have on their new mortgages as well as any early repayment charges if you end your mortgage deal early. These expenses can add to the remortgaging cost, so you should really assess if it still makes sense to remortgage after you add these costs. 

“When Should I Consider Remortgaging?”

Well, it’s up to when you want to remortgage. However, if you are not yet at the end of your term, it’s likely you’ll have to pay an early repayment charge. Many choose to remortgage when they reach the end of their fixed-rate term because this is usually when their current mortgage stops being a great deal. 

Conclusion

Remortgaging can indeed be beneficial to many, but to be on the safe side, you should thoroughly check out the costs involved. There are lenders who will offer deals with zero fees to tempt you. However, many do not, and in such cases, you’ll have to pay for the legal, valuation, and administration fees which can be substantial, too. You shouldn’t jump at the first deal you are offered, mainly either. Compare offers and see which one is best for you.

The First Homes Scheme: Another Route to Affordable Housing

 

 

Launched in June 2021, the First Homes scheme's first units entering the market through an early delivery project in the West Midlands with local authorities required to take First Homes into account from 28 June 2021.

First Homes, which will be considered to meet the definition of ‘affordable housing’ and, as the Government’s ‘preferred’ discounted market tenure, should account for at least 25% of all affordable housing units delivered by developers. Paragraph 65 of the NPPF seeks for 10% of homes in major developments to be for affordable ownership, and First Homes fall into this category. The minimum requirement of 25% of all affordable homes to be First Homes will need to be written into Local Plans and Neighbourhood Plans, although any local or neighbourhood plan that progressed to the publication stage (or further) by 28th June 2021 will not have to include a policy relating to First Homes until a subsequent update.

The key details of the scheme from a developer perspective are:

a) Discount on market value must be a minimum of 30%, up to a maximum of 50% depending on local circumstances
b) Sold to people meeting the criteria (either keyworkers or local residents)
c) Restriction registered on the title to ensure the discount/limitations in perpetuity, secured by s106 agreement
d) Post-discount price of no more than £250,000 outside of London (or £420,000 in Greater London) – although local authorities can set lower caps if evidenced

What does this mean?

Firstly, the First Homes scheme may result in a reduction in the overall number of residences accessible for shared ownership. The proportion of social rent specified in local affordable housing policy is preserved, although First Homes will now push it to second place. It appears that First Homes is focusing on subsuming shared ownership as a tenure. This will, of course, have an impact on some homeowners and registered providers. Many local governments' affordable housing plans are split roughly 70/30 between social/affordable rent and shared ownership, with the latter now dropping to third place.

Next, there's the problem of value and how it will affect units that are offered for social/affordable rent. To reach the £250,000 cap (excluding London), local authorities are likely to need to use a higher discount percentage in higher-value areas of the country.

For example, average house prices in Broxbourne, at the time of writing, are around £370k. Applying a straight 30% discount to this puts the price around £259k – which is therefore above the threshold. Higher discount requirements will therefore be unavoidable in some areas.

When combined with the overall priority given to First Homes, smaller developments could lose a substantial amount of value, and thus viability, as First Homes will be prioritised over social/affordable rent apartments, affecting the ability to supply this tenure. As a result, a potentially unintended consequence will be a further decline of the affordable/social rent stock.

But there are also benefits from a development viability perspective. These are discounted market housing, rather than a form that will require liaison with registered providers, and the price discount will be a known quantity at the application stage. This reduces uncertainty compared with other tenures, and simplifies the negotiation process. It will also potentially improve the viability of some developments, as first homes units are, in most areas, likely to generate better income than shared ownership units.

Whether you have a site going through planning currently or are in the formative stages of design, if you have any questions about First Homes and the implications for your plan, we can help discuss your options and their impact on viability.

 

 

 

 

 

 

 

 

 

 

 

 

Learn the difference between a conveyancer from a solicitor. Keep on reading this guide to help you through the process of transferring your property.

10 February 2022

Should You Use a Conveyancer or a Solicitor in Real Estate?

A solicitor and a conveyancer will both guide you through the process of transferring property, whether you’re buying or selling real estate. You’ll need either one as soon as you’ve agreed to an offer, and they should oversee the transfer of legal ownership. However, how can you decide which of the two is right for your case?

Conveyancer vs Solicitor

Solicitors and conveyancers are fully regulated, insured and capable of transferring the legal ownership of a real estate you are buying or selling. Both operate to almost identical conveyancing practices and procedures when it comes to handling your property transactions. 

However, there are stark differences between the two, and you’ll likely see a difference in the cost of their services as well. As you choose between the two, here are some things to keep in mind:

• A conveyancer is a specialist property lawyer who focuses on residential property. That means they work on progressing transactions like your case every day.

• A solicitor is a qualified lawyer with extensive training in many aspects of the law. That means they can offer full legal services, including divorce proceedings. They’re more likely to offer you advice out of the usual scope of the process but remain relevant to your case. That, too, means they are pricier.

• Having a solicitor as opposed to a conveyancer to overtake your transfer of real estate ownership is going to cost more.

• Mortgage lenders usually only allow conveyancers or solicitors within their panel. They commonly pay the lender for the privilege of being the point people for such services.

• If you don’t use a conveyancer or solicitor on the lender’s panel, you’ll have to pay for the bank’s representation fees. That fee usually varies from bank to bank but averages at £200.

When to Use a Solicitor Instead of a Conveyancer

If you are dealing with complicated transactions, you’ll be better off with a qualified solicitor than a conveyancer. That is because they can perform more than just conveyancing. For instance, a solicitor can properly handle a boundary dispute or sellers getting divorced because they have knowledge beyond property conveyancing law. 

You can expect the matter to be addressed as best as possible. On the other hand, you can expect a conveyancer to handle your transaction of legal ownership transfer from beginning to end.

The Pros and Cons of Having a Solicitor 

As stated above, solicitors are more expensive than conveyancers, but they do bring something more to the table. Solicitors can handle more complex cases with urgent deadlines, but they sometimes work in small practices and have trouble providing continuity of service when they go on holiday.

Some solicitors may also insist on seeing you in person to confirm you are who you claim to be. That can be inconvenient, but it’s a safety measure they do. 

Conclusion

Choosing which to let overtake your legal transfer of ownership can depend on the complexity of your case. If it’s a straightforward transaction, you can make do with a conveyancer. However, if it involves complex matters, you may want to seek a solicitor instead. Most solicitors are highly specialised in their field, while others do conveyancing part-time.