Introduction
It is an exciting time; you are now one major step closer to your dream home. After experiencing elation, reality sets in, leading to feelings of panic and anxiety. What do you do?
After completing all of your initial checksand paying your reservation fee, the real work happens.
Finally, Part 1 discussed how to find your property through paying the reservation fee. This section will discuss a generic process that involves instructing your solicitor and ensuring its completion. It is not legal advice, and it should not substitute for it. Furthermore, it is worth noting that each purchase journey is unique and may not necessarily follow this exact path. On this journey, your solicitor will advise you on what is required.
Timeframes
For those who are buying a new build, it can take you 2 months or more before you move into your new home. It can take nearly a year to move into an off-plan home, and it can take another 3–6 months to move into a resale home. Why does the process take so long? This section will delve into the subsequent steps and provide guidance on how to prepare effectively.
Words of Warning
Once you reach this stage, you need to be aware of two major issues that have the potential to derail your aspirations. First, until contracts are exchanged, either party can withdraw without penalty. This could imply that you have forfeited all your payments, yet you remain free to purchase the property. Secondly, and perhaps most importantly, you should have an agreement in principle (‘AIP’) for your mortgage offer. An AIP notifies the seller of your mortgage approval. Most importantly, you reduce the risk of your seller leaving due to delays.
This prompts a frequently asked important question. Your reservation agreement will include terms such as contract exchange within 28 days or property removal from the market for 28 days. I can’t speak for all shared ownership sellers, but in my experience, delays often lead to seller withdrawal. Generally, if the process advances and the seller receives regular updates, there shouldn’t be any problems.
Upon signing your reservation agreement, make sure you are prepared to proceed by supplying the necessary information and ensuring your availability. Any delays can dearly cost you.
Finding a conveyancing solicitor
Individuals typically seek out a local solicitor or opt for the solicitor that the housing association recommends. In reality, you can easily complete the conveyancing process online, eliminating the need to visit the office. Therefore, restricting yourself to a local solicitor significantly reduces your options.
Initial fee and checks
You will be required to pay an initial set-up fee once you find your solicitor. Typically, this will cost between £250 and £500. Once you have paid the fee, you will need to conduct additional checks. These checks are designed to verify the origin of the funds, and the duration of this process may vary depending on the source of the funds.
Your solicitor will identify the sellers’ representatives while conducting the checks, and you will receive the contract pack and contract report about 1-2 weeks after instructing your solicitor.
Solicitor fees will vary based on several factors, such as location, type of property, if a mortgage is involved, value of the property, requirements of the mortgage company, and other factors. A very general estimate is between £1,500 and £2,000. This does not include your deposit, and it does not include the cost of the survey.
Searches
Generally, searches uncover information about different facets of your property and its surroundings. The cost of each search varies depending on its specific nature, typically falling between £30 and £100. From a purchasing perspective, searches can be either mandatory or optional.
Mandatory searches are those that your mortgage company, insurance coverage, or the law requires. Your solicitor can advise if any searches are mandatory. If you are a cash buyer, you can often choose to forego searches or request additional ones to gain a deeper understanding of your property. Therefore, you can request optional searches to enhance your understanding of your purchases, even though they are not mandatory.
Title Searches
At some point, your solicitor will run a title search. This will confirm who owns the property and if there are any covenants, rights of access, or attachments to the title. Covenants are restrictions or actions you need to take. An example of a covenant could be fencing no higher than six (6) feet or refraining from hanging laundry outside. Consider utilities and rails as the best examples of right of access. It means someone has the right to access your land and provide an essential service. Examples can include running a gas line below ground on your property, rail tracks crossing a segment of your land, or electrical lines crossing above. Finally, attachments refer to debts that the landowner must settle at the time of purchase. Typically, this will include a mortgage or any unpaid debt that has resulted in a CCJ.
Property Surveys
In addition to identifying repairs, a property survey may also consider the property’s value and/or the cost of the repairs. The RICS website provides a very informative guide about the types of surveys available.
As for the question, is a survey mandatory or optional? The answer depends on the type of property (new build or resale) and if you have a mortgage. Many mortgage companies will mandate the completion of a survey. The cost will differ depending on the property’s location, size, type, and type of survey. A very rough estimate is somewhere between £400 and £1,200.
Opportunity to ask questions
Throughout the process, you will have the opportunity to ask questions of your solicitor, who will, when appropriate, also ask questions of the other side on your behalf. You should never contact the other side’s solicitor without first getting permission from your solicitor. Ask your solicitor any questions you have, and if you’re still not satisfied, consider following their complaint process.
Exchanging contracts and completion dates
Once you’ve finished your searches, surveys, and checks and received answers to your questions, it’s time to exchange contracts. Your solicitor will provide guidance on the necessary procedures for that day, the timing and method of transferring funds, and, if you are renting, the appropriate notice period to give your current landlord.
Once you exchange contracts, you become legally responsible for the property, and on completion, you will need to pay all remaining balances.
How long can you have between exchange and completion dates? If feasible, it is possible to conduct both the exchange and the completion on the same day. This usually happens when there is an onwards chain or you want to immediately move into the property. If you require additional time to secure time off work, hire a mover, and/or start packing, it’s advisable to arrange the exchange and completion dates separately. Please note that certain housing associations may have stipulated in your reservation agreement that completion must take place within a certain number of days after contract exchange.
Giving notice to your landlord
Once you pay your reservation fee, there is a natural inclination to give notice to your landlord. The best person who can advise you when to give notice is your solicitor. Generally speaking, you should give notice only after you have completed the sale. There are a few reasons for this. The reasons include, but are not limited to, the fact that completion is not instantaneous and can take months or over a year if the property is off-plan, deals fall through, and sales are dependent on a chain. This will mean for a period of time you will be paying rent for two places, but should the agreement fall through, waiting will prevent you from becoming homeless. Upon completion, you will receive the keys to your house.
Council Tax
Once you have agreed your completion date, you will need to notify your council of your change of address and, if you are moving councils, to let your new council know when you have moved in. If you are facing a change in councils and/or tax bands, then this link will show you how much your council tax will be and how to contact the council about your change.
What could cause the deal to ‘fall through’?
What factors could lead to the collapse of the deal? There are several reasons why a deal could fall through, including issues with the title, an unsatisfactory survey, financing issues (e.g., unable to secure a mortgage, changes in circumstances that cause the mortgage company to withdraw their offer, the mortgage being insufficient), either party deciding to withdraw from the purchase before contracts are exchanged, and other factors.