Buying a home for the first time can be both worrying and expensive. Indeed a commitment to buy your first home is the biggest financial decision you are ever likely to make. Jane Stewart who works in our property department in Truro has some top tips for first time home buyers and helps explain the conveyancing process.
Two of the most frequent questions I am asked by first time buyers are “how much will it cost” and “what do I do next?”
My answer is always to explain, in simple terms, the conveyancing process and to follow the explanation with the reassurance that we will hold their hand all the way, take the worry out of the process and present them with their home at the end of it all.
What is Conveyancing?
Transferring the ownership of land is not like transferring the ownership of, say, a car or a piece of furniture. Land is always there and in the course of time many rights and obligations may be created in relation to it, often not evident on inspection of the property nor disclosed on title deeds. There may also be public rights affecting a property. A property is rarely sold by reference to a binding detailed plan and guarantees cannot be given as to the precise position of boundaries. Therefore title plans must be examined by a buyer and any obvious discrepancies brought to the attention of the solicitor acting. Then there is the question: does the Seller really own the property and if so, is he free to sell it? A conveyancer will check all aspects of the legal title, rights affecting the property, covenants burdening it, interests that a third party may have in the property. A conveyancer will NOT check any physical aspects of the property and the traditional principle of “buyer beware” will always be applied, therefore it is of utmost importance that a buyer checks all the physical aspects of the property including structure, services, heating and electrics.
The Buying Process
A. Pre Exchange
- Viewing the property
- Making an offer
- Appointing a solicitor
- Choosing a mortgage
- Arranging valuation and survey
- Your mortgage offer
B. Between Exchange of Contracts and Completion
- Exchange of Contracts
- Moving Into your new Home
C. After Completion
The above steps show you to see the process, in simple steps, from viewing your chosen property to moving into your home.
1. Pre-exchange: the work carried out after agreement in principle is reached but before the seller and buyer are bound by contract to proceed with the matter;
“Exchange of contracts” – Literally the exchange of one copy signed by the buyer for another signed by the seller. At the point of exchange both parties are committed to proceed. Prior to exchange, some of the most difficult and responsible work has to be done by the conveyancer. The making of local searches and pre-contract enquiries is by no means a formality. A conveyancer will ensure that you do not exchange contracts before all legal enquiries have been answered satisfactorily and before ensuring that you have all the money needed to pay for the property at completion.
2. Between exchange and completion: the stage between “exchange of contracts (when the parties become contractually committed) and “completion” (the day on which money changes hands in return for the keys and transfer of ownership –the day on which the buyer is entitled to move in).
The conveyancer will send you a completion statement showing precisely the sum require to complete your purchase. This is normally the purchase price plus costs and expenses as estimated to you less your mortgage advance.
3. After completion: the conclusion of the formal side of the transaction when documents are submitted to the HMRC for payment of Stamp Duty Land Tax and to the Land Registry for registration of title.
What remains to be done is almost entirely in the conveyancer’s hands. We need to deal with notification to and payment of any SDLT due to the HMRC. The Stamp Duty Land Tax return and payment of SDLT must be sent to the HMRC within 30 days of completion failing which penalty charges can be applied and interest charged. The HMRC electronically returns a certificate which your conveyancer will then deliver to the Land Registry with the transfer and the application to register the title.
Aside from the legal process involved in purchasing your property, there are other practical considerations to take into account when deciding to purchase your first, or any subsequent, home. It is important to research the different costs involved and to find out ways in which you could make buying a home possible and less daunting.
Legal Fees and Expenses
When ringing around for quotes from legal firms it is important to look for “hidden” costs which only become apparent after you have instructed your chosen solicitor and the process has commenced.
Costs are divided between “legal fees” and “disbursements”
These are the fees charged by your conveyancer for acting on your behalf (and on behalf of your lender). A conveyancer should charge separately for both aspects of the work although your Lender will require you to pay both and will sometimes charge for completing the stamp Duty Land Tax Return, maybe made for the latter. On top of these fees, look out for the bank transfer fee, often charged at a rate of between £30 and £40. So, in other words, your legal fees could be:
i) Conveyancing fees
ii) Lender fees
iii) SDLT Return fees
iv) Bank Transfer fees
At Coodes we offer an all inclusive fixed fee of £499+VAT for first time buyers which includes all of the above and which will not change REGARDLESS of whether the conveyancing process is complicated, uncomplicated, a chain transaction or a simple stand alone purchase (NB this rate does NOT apply to shared ownership schemes, because of the extra work involved, but for both first time buyers and buyers returning to the market to take advantage of a shared ownership scheme, we do offer an all inclusive fixed fee of £699 plus VAT for such matters)
Whosoever you choose to appoint as your legal representative, some expenses will be unavoidable i.e.:
Land Registry fees
Stamp Duty Land Tax
Over and above legal fees and disbursements you should also budget for:
Lenders fees and charges
If you are thinking of buying a home for the first time make sure you have planned for all the costs you are likely to face.
There are many other points to consider when purchasing for the first time, whether to purchase with others to save costs, whether to apply for a shared ownership scheme, what mortgage would be best for you. My final word of advice would be – beware price over quality. There are many tempting offers on the internet these days for “cheap” conveyancing but what price can you place on peace of mind?