Buying a house involves a little more than estate agents and property, it also carries some serious legal requirements. It is essential you instruct a solicitor who will carry out a process known as conveyancing. Conveyancing is essentially the term that is used to describe the transferring of ownership of land or buildings from one person to another. The whole process can be broken down into three stages:
- Agreement of Sale
Once your offer has been accepted the solicitor will start the conveyancing process. During this period they will conduct various searches, for example, to make sure no one is planning to build a large, high security prison that would impact significantly upon the value of your property. More precisely this includes:
- The local land charges register: this details any obligations the current owners may have to the local authority or government
- The drainage and water services which notes whether waste water goes into a public or private sewer.
- An environmental search which investigates whether the property is on contaminated land or at risk from other environmental factors
- A planning search with details of local planning locations
- Identity checks
- Bankruptcy searches
The solicitor will also be able to advise you on any potential incurred costs which may rise from these searches so you can budget appropriately.
- Exchange of contracts
The solicitor will give the buyer the chance to raise any questions, known as requisitions. These could include questions such as those about noise levels heard from a neighbour or who should mend a garden fence. The seller or their solicitor will be expected to answer the questions truthfully and solve any problems.
Once the solicitor is satisfied with all the relevant checks they will proceed with the contract exchange. This involves signing the contract which obligates you to complete the purchase and at this point you will need to pay your deposit. From this moment the property is the responsibility of the buyer and relevant home insurance should be taken out to cover any damage that could be incurred.
A date for Completion will be then be agreed between all parties.
The solicitor will register you as the new owners with the Land Registry as well as paying all the related fees on your behalf including the Stamp Duty. All monies will be paid between the solicitors at an agreed time and the new owners will be given the keys to their new home!
Stamp Duty Tax
Stamp Duty Tax is often overlooked by first time buyers who may not know to include it in their budget. However, it must be paid on any property purchased over £125,000. It can significantly add to the cost of purchasing a house and must be paid no later than 30 days after completion. Not only do you pay tax on the value of the house, but also any included fitted furniture (although moveable furniture can be subtracted from the rate you need to pay.) The tax is tiered and charged in degrees, so you pay incrementally:
2% on the portion up to £250,000
5% on the portion up to £925,000
10% on the portion up to £1.5 million
12% on the portion over £1.5 million