Buying or Selling a Property in England or Wales?
“So many different elements: solicitor, mortgage broker building insurance, life assurance, estate agent, council planners, and energy certificate … orchestrating all of these elements requires nerves of steel and some patience.”
Buying or selling a property are said to be among the most stressful human experiences alongside divorce and moving home. Things do not always go according to plan and solicitors and estate agents both receive their fair share of complaints, from both buyers (purchasers) and sellers (vendors) for dragging their feet. This guide will put you in the picture about the process of buying or selling residential property ‒ from finding somewhere you want to buy to exchanging contracts, or conversely, putting your property on the market and handing over the keys.
From the point of an offer, how long should buying or selling a house take? From the point where an offer is accepted it ought to take around two to three months to sell a property; however, it often takes longer if a chain of buyers and sellers is involved or if there are issues with any of the paperwork such as the conveyancing or deeds. The same process in reverse can affect how long it takes to buy a property
Purchasers There are specific steps to buying and selling a property in England and Wales and it is advisable to employ a solicitor because of the amount of legal paperwork involved. Prospective purchasers should make sure they have a “mortgage in principle agreement” in place as this often means their offer is taken more seriously. It is also advisable to have a solicitor ready to act immediately the offer is made. For purchasers, there will be surveys to look into too ‒ there is more about this at the end of this article. Anyone can buy property straight from the owner providing the property owner has not already signed up with an estate agent to manage the sale.
Vendors Like purchasers, vendors should have a solicitor acting for them, unless they have knowledge of the legal process. An estate agent on the other hand is not essential, but if the vendor has signed an agreement with an estate agent for the sale then it must be managed through the agent.
Energy Performance Certificate A potential vendor must hold an Energy Performance Certificate from an accredited assessor before putting residential property on the market (or if renting it out). An EPC contains information about the property’s energy usage and typical energy costs, which must be available to the purchasers of the property.
Some properties (i.e. places of worship, holiday accommodation, workshops, warehouses, listed buildings) don’t require an EPC. Anyone can view other properties’ EPCs to compare their own and can search by address or by EPC report reference number.
Vendors Estate agents are obliged under contract to treat vendors fairly by sharing any offers on the property promptly, in writing, passing on all offers to the vendor right up to the stage when contracts are exchanged with the purchaser.
Purchasers Purchasers can make offers verbally (over the phone or in person) or in writing to the estate agent. For private sales, a purchaser can make an offer directly to the vendor.
Prospective purchasers can make an offer below the asking price and it is up to the vendor to decide whether to make a counter-offer, refuse outright, or accept the offer. The market is sensitive to stamp and land duty thresholds and this affects the asking price as much as how vendors and purchasers negotiate the final price. An offer “subject to contract” means the price is still open to negotiation; say, for example, the survey uncovers an issue, the purchaser might make a lower offer to cover the work required to rectify it.
Contract When the purchaser’s offer has been accepted, the vendor (or vendor’s solicitor) is responsible for drawing up the legal contract to transfer ownership. An offer is not legally binding until exchange of contracts.
Transferring ownership (conveyancing) Delays often happen at this stage, conveyancing is the legal term for transfer of ownership of the property. It is undertaken by the vendor’s solicitor and the purchaser’s solicitor and it can be a lengthy, frustrating, and worrying process. This stage involves ensuring the vendor has the legal right to sell the property and checking there are no disputes on land or rights.
Contract The vendor’s solicitor must have the deeds to the property to prepare the contract and will make other enquires, often in the form of a questionnaire concerned with the property boundaries, fixtures and fittings included in the sale price, disputes or complaints with the neighbours.
Leasehold properties often involve more work than freehold properties. Say the property for sale is a leasehold flat with service charges, the solicitor must see the “memorandum and articles of association” of the management company and its accounts over the past three years, and this can delay the process and make it more expensive.
The purchaser’s solicitor meanwhile will make a local authority search to find out other details about the property (i.e. roads or sewers, road-widening proposals, environmental issues, i.e. subsidence, flooding, industrial contamination, or radon, council tax band), although some of the details should be provided in the vendor’s Home Information Pack.
The importance of Follow up It often pays for both purchaser and vendor to become the “persistent squeaky wheel” with their respective legal representatives at this point, as the process of conveyancing is notoriously slow ‒ there are many parts to bring together. Checking-in frequently with the solicitor to see how things are going and if possible keeping in touch with the purchaser/vendor to update, commiserate, and check that everything is still okay with the sale is to be encouraged.
The contract includes:
- the sale price;
- boundaries of the property;
- fixtures and fittings (i.e. carpets, light fittings, door furniture, kitchen units, maybe white goods) included in the sale price;
- legal restrictions or rights, i.e. public footpaths, rules of use of the property;
- planning restrictions;
- services to the property, i.e. water, drainage, gas;
- date of completion of sale.
Either the vendor’s solicitor or the conveyancer drafts the initial contract, answers questions from the purchaser’s solicitor or conveyancer, and negotiates the details of the contract if necessary.
Exchanging contracts The exchange of contracts literally is what it says: it is a contract that contains details about the property and its sale and purchase: when both purchaser and vendor are satisfied with the contract, final signed copies are exchanged between vendor and purchaser.
Now the agreement to sell and buy the property is legally binding. At exchange, the purchaser usually puts down a 10% deposit, and neither party can pull out of the sale without paying compensation.
Completion When the contracts have been exchanged and any checks the purchaser requested are complete, the money can be transferred from the purchaser to the vendor. Normally after exchange, a date is fixed for completion of around four weeks, sometimes sooner. The funds for the purchase must be ready for the date of completion and must reach the vendor’s account by the date and time of completion.
The transfer-of-ownership documents should be in the purchaser’s possession now, and the vendor must move out of the property on the date and time agreed on the contract. The keys to the property must be handed over to the purchaser at the time stipulated at exchange of contract, as the property has now transferred to new ownership.
Stamp and land duties Stamp duty and land tax depends on the sale price of the property, but the purchaser of the property pays any amount due.
After the purchase is completed, the solicitor will register the new owners of the property at the Land Registry and any mortgage. A land registry fee is due for the work the Land Registry does registering new ownership and/or mortgage charge.
Whether buying or selling, bear in mind the rules relating to land and stamp duty tax; your accountant or financial advisor can help you make tax-efficient decisions, as well a advise you on landlord property taxation and property tax for residents and non-residents. All of these rules will have an affect on your ability to manage the costs of owning property in the UK, whether a first-time buyer or someone with ambitions to build a property portfolio.
Other useful information for purchasers
Mortgages Potential purchasers should arrange a mortgage before searching for somewhere to buy to prevent any hold ups. “Mortgage-in-principle” agreements help to speed things up and give the vendor confidence that you have the asking price of their property. It will state that subject to valuation and status you are guaranteed a loan up to a certain amount.
Solicitors Preferably, hire a solicitor before you make an offer unless you have legal training, as you probably will require help to deal with the legal aspects. You should get quotes from several firms and understand what the quote covers, i.e. searches, conveyancing, contracts, etc. If buying and selling, using the same solicitor for both can work out cheaper.
The survey The surveyor’s report goes into detail and points out any problems with the property: i.e. dry rot, subsidence, any manner of structural, or land issues. The mortgage provider arranges for valuation, a survey that the purchaser pays for. Provided the property offers enough security for a loan, you should be offered a mortgage.
Three types of survey The compulsory mortgage valuation costs around £200 but does not go into much detail.
A homebuyer’s survey costs from £250 to £400, depending on the price of the property, and is more likely to reveal any serious defects. If it uncovers any major faults, you can ask the vendor to rectify them or come down on the asking price.
A full building survey costs anything from £400 to over £1,000 depending on the property, and goes into even more detail about its condition. For a period property or a property in poor repair, this is the sort of survey advised.