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Find answers to common questions about conveyancing. Insights on the conveyancing process, timelines, costs, and more to guide you through every step of your property transaction.
General FAQ’s
- What is conveyancing?
This is the legal process and mechanics of transferring the ownership of a property from one party to another. It can also refer to any other transaction regarding residential property including remortgaging a property.
- What is the difference between and conveyancer and a solicitor
A solicitor is qualified legal professional who can represent and advise clients on a variety of legal matters. Solicitors are registered with, and regulated by, the Solicitors Regulation Authority.
A Conveyancer is a specialist in property transactions and only deal with property related legal issues. Conveyancers may not have the same qualification or regulation as a Solicitor.
- What does a conveyancer do
A conveyancer deals with the legal process of buying, selling or remortgaging a property.
On a purchase, a conveyancer would typically:
- Take your instructions and give you initial advice
- Receive and advise on contract documents
- Carry out searches
- Make any necessary enquiries of seller’s solicitor
- Report on the title of the property to you (and your lender if you are obtaining a mortgage)
- Report to you on the mortgage offer
- Send final contract to you for signature
- Draft the Transfer Deed
- Obtain pre-completion searches
- Exchange contracts and notify you that this has happened
- Arrange for all monies needed to be received from lender and you
- Complete purchase
- Deal with payment of Stamp Duty/Land Tax
- Deal with application for registration at Land Registry
On a sale, a conveyancer would typically:
- Take your instructions and give you initial advice
- Prepare the contracts for sale
- Issue the contracts
- Deal with additional and standard enquiries raised by the buyer’s solicitors
- Liaise between you and the buyer’s solicitors on any enquiries
- Complete the sale
- Deal with post completion matters
If the property being sold is leasehold or freehold with a management company, the following stages may also apply:
- Sending the Leasehold or Management Information Pack to the Buyer’s solicitor
- Liaising with the Landlord and / or Management company
- Dealing with additional enquiries raised by the Buyer’s solicitor in respect of the Leasehold or Management Information Pack.
On a remortgage, a conveyancer would typically:
- Take your instructions and give you initial advice
- Review the title to the Property
- Review and deal with requirements of your Lender
- Report on the terms of the mortgage offer to you
- Report on the title of the Property to the Lender
- Register the Lender’s charge at the Land Registry
- Deal with post completion matters
- Who is my conveyancer and how do I contact them
At the start of your transaction we will send you our Client Care Letter. This will confirm the name of your conveyancer and their contact details. You can also find the contact details for your conveyancing on your PLS Portal 24/7 account. Your conveyancer can be contacted by phone and email or through your PLS Portal messaging function. You can track the progress of your transaction anytime, anywhere through your PLS Portal account PLS Portal 24/7 - PLS Solicitors (pls-solicitors.co.uk).
- How much does conveyancing cost
The costs of conveyancing varies depending on the nature and complexity of the transaction. You can visit our website for guidance on how much a transaction may cost: Conveyancing Fees - PLS Solicitors (pls-solicitors.co.uk) Can you also visit our website for a free quote: Get a Quote - PLS Solicitors (pls-solicitors.co.uk). A detailed quote will always be provided to you at the beginning of your case and our Terms of Business provide information on any additional legal fees that maybe payable depending on the circumstances of the transaction.
- How often will you update me
We are committed to keeping our customers informed, providing the latest update on your case as well as supporting you on queries you may have. We appreciate that our customers have different ways in which they wish to get in touch, that’s why we have created different methods and platforms.
Ways you can get in touch and stay informed
- The PLS 24/7 Portal and Mobile App provide notifications on your case progress
- The PLS 24/7 Portal and Mobile function for you to get in touch with your legal team
- Call your dedicated legal team on their direct line
- Download the PLS Alexa App ‘askPLS’ to keep up to date with updates in your case.
Property transactions involve a lot of legal work that goes on in the background. There are lots of aspects to this and it can take time. Rest assured we will keep you updated on the key stages of your property transaction, when we have something to tell you or when we need your assistance with something.
Selling a Property
I am selling a property, how long will it take
The average length of a conveyancing transaction from instruction to completion is currently about 15-20 weeks. However, the time an individual case takes to complete can vary greatly, depending on the particular circumstances, and is largely the result of the readiness and willingness of all parties to proceed, the property title (eg freehold, leasehold, registered, un-registered), responses from landlords or management companies, and other factors.
The following are some examples of factors which can affect the timescale in a conveyancing transaction. This list is not exhaustive:
- Delays by third parties, e.g. the other side’s solicitor
- A delay elsewhere in the chain
- Probate or divorce proceedings
- Obtaining necessary information from third parties such as management companies or landlords
- Complex titles
- Leasehold properties and flats
- Unforeseen work e.g. existing tenants in the property or obtaining planning and building regulation consents for works undertaken, specialist reports required.
- There is an adult occupier living at my property, does that matter?
Yes, you must let us know if there is anyone over the age of 18 years living at the property you are selling. You must disclose to your Buyer if there is an adult occupier living at the property. Any adult occupiers will be required to sign a copy of the sale contract to acknowledge that they are aware of the sale and that they will vacate the property prior to completion.
- What is an Early Repayment Charge
An Early Repayment Charge (ERC) refers to the financial penalty that a mortgage lender can charge if you repay your mortgage before the end of the term agreed with your mortgage lender at the outset. For example, if you repay your mortgage before the expiry of the term of your fixed interest mortgage rate, your mortgage lender may charge an ERC.
- What is a redemption statement
This refers to the statement produced by your current mortgage lender which tells you how much is required from you to redeem (repay) your mortgage in full. If we are acting for you on a sale or remortgage transaction, we will contact your current mortgage lender to request a redemption statement on your behalf.
- The buyer’s solicitor has raised enquiries, what does this mean
If we are acting for you in connection with your property sale, we will prepare and send to the Buyer’s conveyancer a Draft Contract Pack. This will typically include evidence from HM Land Registry to show that you own the property (the Title Register), a copy of any documents referred to in the Title Register, a plan for the property, a copy of the Property Information Forms you have completed and copies of any other guarantees, building regulations approvals, planning permission or other documents (such as a lease if the property is leasehold).
On receipt of these documents, it is the Buyer’s conveyancer’s job to check through all of these documents to ensure that they are in order, that no information is missing and that the title to the property is sound. The Buyer’s conveyancer will also review the Buyer’s property search results. If the Buyer’s conveyancer has any queries about any of the documentation or search results, they will raise enquiries (also known as pre-contract enquiries) with the Seller’s conveyancer. It is very normal for these enquiries to be raised. As your conveyancer, we will respond to these enquiries on your behalf. We will contact you if we need your assistance with any of the enquiries.
The Buyer’s conveyancer can continue raise enquiries up to the point of exchange of contracts. If your transaction is more complex (such as a leasehold flat, or a property affected by the Building Safety Act 2022), it is likely that the Buyer’s conveyancer will have a longer list of enquiries to raise.
The process of raising and responding to enquiries can take time, but be assured that legal work will be going on in the background to deal with the enquiries and we will contact you if we need your assistance.
Buying a Property
I am buying a property, how long will it take
The average length of a conveyancing transaction from instruction to completion is currently about 15-20 weeks. However, the time an individual case takes to complete can vary greatly, depending on the particular circumstances, and is largely the result of the readiness and willingness of all parties to proceed, the property title (eg freehold, leasehold, registered, un-registered), responses from landlords or management companies, and other factors.
The following are some examples of factors which can affect the timescale in a conveyancing transaction. This list is not exhaustive:
Unforeseen work e.g. existing tenants in the property or obtaining planning and building regulation consents for works undertaken, specialist reports required.
Delays by third parties, e.g. the other side’s solicitor
A delay elsewhere in the chain
Probate or divorce proceedings
Obtaining necessary information from third parties such as management companies or landlords
Complex titles
Leasehold properties and flats
Photo and proof of address ID
Why do I have to send you my ID
We require photo and proof of address identification for every client that we act for. This is required in order to comply with our obligations under the money laundering regulations. The money laundering regulations also require us to verify the identify of all of our clients. To ensure that this is done in a safe and convenient way for you, we use a 3rd party provider of ID checks. Further details are contained in the Client Care Letter sent to you at the start of your transaction.
We are also subject to statutory guidance that makes it compulsory for us to ask you about where you are getting the money from to fund any transaction. We have no alternative but to ask you these questions and you must answer our questions and provide us with the information and evidence that we require.
Contracts
What is a draft contract pack
This is the collection of documents that the Seller’s lawyer sends to the Buyer’s lawyer at the start of a purchase transaction. It is the responsibility of the Seller’s lawyer to draft, collate and issue to the documents in the pack to the Buyer’s lawyer.
A number of documents are expected to be included in the draft contract pack including:
- The draft contract to sell the property;
- A copy of the title register and title plan to the property;
- The Lease to the property (if leasehold)
- The Property Information Forms;
- A copy of any documents referred to in the title register to the property;
- Copies of guarantees, planning permissions, building regulations approvals and/or any other documents available in connection with works carried out at the property.
- Where the property is leasehold or freehold with a management company, the Seller is also expected to provide a Management Information Pack from the landlord and/or managing agent.
Where a property is not registered at HM Land Registry, a photocopy of the original title deeds to the property would also be included in the draft contract pack.
The Buyer’s lawyer cannot commence the legal and administrative work on behalf of the Buyer until the draft contract pack has been received.
- What are Property Information Forms
These are forms used in the conveyancing process to provide the Buyer and their lawyer with information about the property and it’s contents. The forms are in a format that is prescribed by the Law Society and include:
- The Property Information Form (Form TA6);
- The Leasehold Information Form (Form TA7) (applicable if the property is leasehold);
- The Fittings and Contents Form (Form TA10);
These forms are completed by the Seller of the property and provided to the Buyer’s lawyer along with the draft contract pack. The forms provide answers to many common conveyancing questions and are designed to reduce the number of pre-contract enquiries that a Buyer’s lawyer may need to raise. Copies of the forms will be provided to you along with the Report on Title.
- What are Fixtures and Fittings
These refers to the items that are included or excluded from the sale price of the property. Usually the Seller will complete a Fittings and Contents Form (Form TA10) which details the items being included and excluded from the sale. This will confirm for example if the carpets or curtains are included in the sale, or if any white goods, like fridges and freezers, are included in the sale price.
The Seller can use this form to communicate to the Buyer if an additional price is being charged for any items for example. A copy of this form will be provided to you along with the Report on Title. When you receive this form you should check it carefully to confirm that it includes or excludes all items that you expect.
- What are Office Copy Entries, the Title Register and title deeds
These are the documents that evidence a Seller’s ownership of a property.
Title Deeds: Before the creation of HM Land Registry in the 1860’s, a person’s ownership of a property in England and Wales was evidenced by a collection of title deeds to the property. These were a collection of chronological conveyances and other documents which evidenced how the property had passed from one owner to the next owner during the property’s history. These deeds also evidenced any rights that the party had the benefit of or covenants that it was subject to. These documents were very important, as they were the only means of proving your ownership of a property.
Title Register: Following the creation of HM Land Registry (HMLR), it became compulsory for property in England and Wales to be registered. Where a property has been registered, HMLR maintain a register for each property which details the name of the current registered proprietor, details of any rights that the property has the benefit of, any covenants that the property is subject to and any financial charges (e.g. mortgages) that are secured against the property. This is known as the Title Register.
When a property is first registered at HMLR, copies of all available original title deeds need to be sent to HMLR. HMLR then review these and extract relevant information about the rights and covenants affecting the property to be included in the newly created title register. Once a property is registered, the old-fashioned original paper title deeds become obsolete.
The Title Register is sometimes referred to as the Office Copy Entries. This terms actually refers to the condensed information about the property held within the title register itself. Where you are buying a property, you will be provided with a copy of the Title Register to the property with the Report on Title.
- Do I need to come into the office to sign my contract
No, you do not need to attend at our offices to sign your contract. A copy of the contract will be uploaded to your PLS Portal along with our Report on Title. You can then print the contract, sign it at home and post the original to our offices. If, for any reason, we require you to sign an original hard copy of the contract, this will be posted to your address and you can sign it at home and return it to us in the post.
- When and where do I sign the contract
The contract will be uploaded to your PLS Portal along with the Report on Title. We usually provide you with the Report on Title after the draft contract pack has been received from the Seller’s lawyer, we have checked the documents that have been provided and we have raised pre-contract enquiries with the Seller’s lawyer. We will notify you by email when your Report on Title has been uploaded to your PLS Portal. You can then print the contract, sign it at home and return the original signed contract to our offices in the post. There is no need to attend our offices to sign your contract. If, for any reason, we require you to sign an original hard copy of the contract, this will be posted to your address and you can sign it at home and return it to us in the post.
- What are the ‘Standard Conditions of Sale’
The standard conditions of sale are a set of Law Society produced contract conditions which are incorporated into the vast majority of residential property sale contracts. The standard conditions of sale cover most foreseeable eventualities arising from a land transaction including the deposit, insurance and risk, what happens if the buyer wishes to occupy the property before completion and what happens if there is a late or failed completion.
- I have purchased a property at auction, what difference does this make?
There are several fundamental differences exist between traditional property listings versus auctions. In a normal house sale and purchase there are no set timescales, and the buyer and seller agree to exchange Contracts once they are ready. Completion can then be fixed for any date agreed by the parties. Auctions have fixed timescales, depending on what type of auction is involved, and the seller provides the Contract documentation and searches prior to the auction for any potential bidders to view.
There are two different types of auction:
- Traditional Auction: In a traditional auction there is usually a starting or guide price and a reserve price, which must be met for the home to sell. All bids taken are legally binding. If you are the highest bidder, you will exchange contracts and pay a 10% deposit immediately. If you change your mind, you will lose the deposit and may be liable for further costs. The buyer must complete the purchase within 28 days .
- Modern Auction. Modern property auctions take place online and have quite different rules and timescales from the traditional method. Modern property auctions are online and the winning bidder pays a 5% reservation fee and must exchange contracts within 28 days – not immediately, completing within 56 days of the auction.
With both types of auction, the buyer will usually be expected to reimburse the seller for the cost of any searches provided
- What is an affordable housing scheme?
Affordable housing is housing provided to those who may be struggling with their housing costs and whose housing needs are not met by the current property market. Affordable housing can take many forms, but whatever format it takes, it is always provided at a price below market rate, usually as part of a scheme backed by the government or local authority.
The housing is designed to remain at an affordable price for future eligible households.
Examples of affordable housing include :
Shared Equity - Local Authority Equity Loan Scheme
Discount to Market Housing;
Shared Ownership;
Pre-contract enquiries
What is a management information pack/LPE1 Form ?
A leasehold information pack contains all of the relevant documents and information related to a property that is being purchased on a leasehold basis. The seller’s solicitors will request the pack from the landlord or management company or their agents. There will be a fee payable for this information.
Management Packs Will Include:
- LPE1 Form (Leasehold Property Enquiries Form) – This is completed by the landlord or the management company and provided essential information about the management of the property, including establishing if there are any problems or disputes
- Copy accounts and budget
- Statement of service charges and ground rent for the property.
- Reserve fund information
- Building insurance if arranged by the Landlord
- A Fire Risk assessment & asbestos report for internal shared communal areas
- Details of any proposed future maintenance works
- Details of post completion requirements, such as notices, shares or deeds of covenant.
- What are pre-contract enquiries
Pre-Contract enquiries are questions raised by the buyer’s solicitors in relation to the information provided in the draft contract pack. The buyer’s solicitors will review the contract paperwork and will ask questions to clarify any issues in relation to the title to the property or any matters raised by the seller in the Property Information Forms. The purpose of enquiries is to resolve any defects or issues that may arise either during ownership or on a future re-sale of the property.
Solicitors firms who are accredited under the Conveyancing Quality Scheme (CQS) are bound under the conveyancing protocol to “Raise only those specific additional enquiries required to clarify issues arising out of the documents submitted or which are relevant to the particular nature or location of the property or which the buyer has expressly requested.”
You should note that the buyer’s solicitors do not raise enquiries relating to the state and condition of the property or any installations. If you are purchasing a property you are strongly advised to obtain a survey and test any installations such as gas or electrics before exchange of Contracts.
- How long does it take to deal with pre-contract enquiries
Unfortunately there is no standard time for pre-contract enquiries to be dealt with. The length of time that it takes to obtain satisfactory replies to enquiries will depend on the type of enquiry, and whether it is necessary to obtain information from third parties. For example, leasehold properties usually take longer, because there is a landlord and often a management company or managing agent who needs to provide information.
- What does ‘Buyer Beware’ mean
“Buyer Beware” or “Caveat Emptor” means that the onus is on the buyer to investigate the property and find out everything they need to know about the property before buying it. The seller is not under a general responsibility to disclose defects. This is why we strongly recommend that you obtain a Homebuyer or building survey and consider having the gas and electrical systems tested before you proceed.
Searches
What are property searches and why do I need them
Property searches are an important part of the conveyancing process. If you are purchasing with a mortgage then searches are mandatory. If you are a cash purchaser then you have the option to proceed without undertaking searches. However, we would always strongly advise against this.
Types of property searches include:
Local authority searches – the local authority search contains information relating to matters such as conservation areas, smoke control areas, planning permissions or building regulations approvals, restrictions on permitted development, planning enforcement or breach of condition notices, tree preservation orders, adopted roads and public footpaths, highways and rail proposals and financial charges registered against the property.
Environmental searches – this search provides information about the risk of flooding or ground instability, radon gas, contaminated land or landfill sites that might exist near the property, and the proximity of energy installations such as wind turbines or solar farms.
Water authority searches – this search checks whether the property is connected to mains drainage and sewerage, and shows the location of drains and sewers.
Location-specific searches – additional searches can be required which are specific to parts of the country, such as coal mining, tin mining, clay or cheshire brine searches.
Title’s
What is the difference between a freehold and leasehold title
A Freehold property means that you own the property outright including the land on which the property is built.
A Leasehold property means that you own the property for a fixed number of years as defined in the Lease with the freeholder (also known as the Landlord). With a leasehold property, you do not own the land on which the property is constructed. You have the right to live in the property, but you must comply with the rules set out in the Lease. With leasehold property you typically pay a ground rent and service charge to the landlord.
Whether or not you can buy a freehold may change depending on the type of property. If your leasehold property is a house, you may be able to purchase the freehold. However, with a flat, the freehold is usually held by the landlord, subject to the leases. This is because it is necessary for someone to be responsible for the insurance and maintenance of the structure of the building and the common parts.
- What is a management company
Both Leasehold and freehold properties can have management companies. Leasehold properties, such as flats, commonly have a management company to carry out the various services required for maintenance of the block. However some freehold properties can also involve a management company if they are subject to annual service charges where there are common areas, open spaces or private roads on the estate. The exact obligations of the management company will be set out in the property lease or transfer documentation.
In some cases, the property owners will have a share in the management company. This share will need to be transferred into the new purchasers name when the sale completes.
The management company may also have a restriction on the title to the property requiring them to provide a certificate of consent to any sale. The seller will need to ask the management company to provide a sale information pack and pay the relevant fee. The pack provides information for the purchaser, including details of any service charges and budgets, copies of any accounts and insurance policies and details of any post completion requirements. Typically, the management company requires the purchaser to give them notice of the transfer, and they will also often require the purchaser to enter into a Deed of Covenant promising to comply with the terms of the lease or transfer. The management company is likely to charge the purchaser additional fees in connection with these post completion requirements.
- What is a rent charge
A rent charge is an agreement where a property owner is liable to pay a sum to a third party, the rent charge owner, who otherwise has no interest in the property.
A rentcharge is an annual sum paid by a freehold homeowner to a third party who normally has no other interest in the property.
A rentcharge can also be referred to as a ‘chief rent’, ‘estate rentcharge’ or a ‘freehold rentcharge’.
A rentcharge is different to a ground rent which only relates to leasehold property.
Most rentcharges have existed for many centuries and are part of an historic system whereby land owners who released part of their land for development could charge a regular payment from the people living on it.
The Rent Charge Act 1977 provides that since 22nd August 1977, no new income supporting rentcharges can be created. However, it is still possible to create an ‘Estate Rentcharge’.
An Estate Rent Charge is a method by which developers building a housing estate can charge the legal owners of freehold properties for the cost of the upkeep of any communal/shared spaces such as maintenance of shared areas and public spaces.
There can be serious implications should the rentcharge not be paid in full. There are various remedies available to either a historical rentcharge or new estate rentcharge owner pursuant to Section 121 of the Law of Property Act 1925 including:
- The right to take possession of the Property, without notice.
- The ability to create a Lease of the property and register it at the Land Registry, without notice.
- To trigger enforcement of the above remedies, the rentcharge payments must have been in arrears for over 40 days. However, there is no requirement for the rentcharge owner to raise a demand for payment.
As a result, mortgage lenders have now begun to introduce criteria with regards to rentcharge provisions Their requirements may also include seeking a variation of the rentcharge deed and/or procuring indemnity insurance to mitigate any financial loss caused by enforcement of the rentcharge.
- What is service charge
Service charges are typically payable on leasehold properties. However, they can also be payable on freehold properties where there are common areas or common services that need to be maintained by a management company. Service charges are payments by the owner of the property to a landlord or management company for the services that they carry out, such as maintenance and repairs, insurance etc. Often the charges will also include the costs of management by a professional managing agent.
Service charges typically vary from year to year; they can go up or down without any limit other than that they are reasonable.
- What is ground rent
In leasehold property, ground rent is an annual payment to the landlord set out in the Lease. The ground rent can be a fixed amount for the whole term of the lease, or it can be an amount which is reviewed and increased at intervals during the term. You may see reference to a “peppercorn rent”, which means that no payment will be demanded by the landlord.
- What is a restrictive covenant
Both freehold and leasehold properties can be subject to certain conditions called restrictive covenants. These are restrictions on what you can do with the property. Some restrictive covenants are an absolute prohibition, while others require you to obtain permission from the person with the benefit of the covenant. Common restrictive covenants include:
- Not carrying out alterations to the property without consent
- Not carrying out trade or business at the property
- Not erecting fences over a certain height
- Not restricting common accessways
- What is indemnity insurance
Indemnity insurance is an insurance product used in conveyancing to cover potential risks or legal defects with the property. Indemnity insurance can cover a variety of risks, including missing documents, breaches of restrictive covenants, planning or building regulations, or defects in the title to the property, such as a lack of rights of way. The purpose of the policy is to cover the costs of any legal enforcement or any loss in value of the property due to the particular risk or defect. The insurance is purchased with a one off payment, and the policy can be passed on to future owners of the property.
- What is a Report on Title
The report on title is a document that we send to you in relation to your purchase. Your case handler reviews the title documentation and plan of the property and the Property Information Form and Fixture and Fittings Form. They will also carry out searches and raise enquiries of the sellers solicitors in relation to any matters that need to be clarified.
The Report on title sets out all of the relevant information about the property. Including the following:
- Information about the Contract and price
- Information about the title to the property, including details of any restrictive covenants or rights granted
- The plan of the property
- Any alterations requiring planning and building regulations approvals
- Any guarantees or warranties
You will need to read this document carefully and let your case handler know if you have any questions.
- There is a fraud restriction registered against my property, what do I need to do
A restriction in the property title register limits the owner’s ability to deal with the property.
Form LL is often referred to as the 'counter-fraud' restriction. It is designed to help prevent the type of fraud in which a fraudster obtains identity documents in the name of the registered property owner, and uses them to persuade a buyer or lender that they are the true owner of the property. This could be a tenant with access to it, or another party.
The restriction reads: "No disposition of the registered estate by the proprietor of the registered estate is to be registered without a certificate signed by a conveyancer that the conveyancer is satisfied that the person who executed the document submitted for registration as disponor is the same person as the proprietor."
Having this restriction in the title register can cause delays in the process of selling, leasing or mortgaging your property as you'll need a qualified lawyer, such as a solicitor, to personally verify your identity before you can mortgage or sell the property. You’ll need to obtain a certificate from them to say that you, as the registered proprietor, have signed the transfer, lease or mortgage deed.
That isn’t necessarily a problem, but it can cause delay in the transaction process while you obtain the required certificate. In order to provide the certificate on your behalf, we will need to arrange a video call with you where you present your original identification documents. There is an additional legal fee for this process.
- What is a Deed of Variation
A Deed of Variation is a legal agreement used to amend the terms of an existing document, such as a Lease or Transfer. It is not always possible to enter into a Deed of Variation, as all the parties involved will need to agree to the changes.
There are various reasons that a Deed of Variation may be required. One common reason for a Deed of Variation is to alter the terms of an existing document of property because the original document contains errors. For example, the original document may contain an inaccurate description of the property, or the document may not contain all of the rights necessary for the use of the property, such as rights of way. Another common reason for a Deed of Variation is that older documents may contain provisions that are no longer acceptable to mortgage lenders, for example in relation to ground rent review or rentcharges.
You should note that entering into a Deed of Variation can be a lengthy process and will attract additional legal fees.
- What is the Building Safety Act 2022 and how does it affect me
The Building Safety Act 2022 (‘the Act’) was introduced to try and tackle some of the fundamental safety issues that were brought to the fore by the Grenfell Tower disaster in 2017.
The Act introduces additional roles and responsibilities to make high-rise residential buildings safer.
The Act also introduces new financial protections for leaseholders in buildings with historical safety defects. The provisions protect some leaseholders against having to contribute towards the costs of repairing historical safety defects, such as unsafe cladding.
For some properties, the Act introduces the requirements for a Leaseholder Deed of Certificate and a Landlord Certificate to record various information including whether or not a property has a ‘Qualifying Lease’ for the purposes of the Act.
The Act is a complex piece of legislation and its introduction has raised many questions and created a lot of uncertainty in the conveyancing process. Most high street mortgage lenders have introduced further requirements as a result of the Building Safety Act 2022, which in some cases, can be very onerous on law firms. Because of this, many law firms have decided not to act on property transactions involving properties affected by the Act.
Transactions involving properties affected by the Act are complex and there is a significant amount of additional legal work that we need to do as a result of the new legislation.
Transactions involving a property affected by the Act can take longer because of the additional legal work required as a result of the Act.
More information on the Act can be found here: The Building Safety Act - GOV.UK (www.gov.uk)
- What is an EWS1 Form
A Form EWS1: External Wall Fire Review is a form used by the owner of a building containing flats, to confirm to mortgage lenders and valuers that an external wall system (such as cladding) or attachments to the exterior of a building (such as a balcony) have been assessed in relation to their fire safety risk. Once a building has been assessed, the form is used to give the building a rating to show if it has any external cladding that may be a fire risk. If the EWS1 shows that there is a fire risk, the building may need repair work and the value of the property could be affected.
The EWS1 form was introduced following Government advice regarding external wall systems (EWS) on buildings containing flats, to ensure that buildings could be assessed for safety and to provide mortgage lenders and valuers with assurances about the fire safety of a building with an EWS.
More information about the Form EWS1 can be found here: Cladding External Wall System (EWS) FAQs (rics.org)
- What are building regulations
Building regulations apply whether you are self-building, renovating or extending. In fact, most of the construction work – even fairly minor alterations – will require building regulations compliance of some kind of the other.
Building regulations are guidelines that serve to ensure structural integrity, fire safety, accessibility, energy efficiency, and sanitation standards within buildings. They apply to all construction projects, including new builds, renovations, extensions, and alterations. Adhering to these regulations is mandatory by law.
You might also need building regulations approval for many alteration projects, including if you plan to:
- replace fuse boxes and connected electrics
- install a bathroom that will involve plumbing
- change electrics near a bath or shower
- put in a fixed air-conditioning system
- replace windows and doors
- replace roof coverings on pitched and flat roofs
- install or replace a heating system
- add extra radiators to a heating system
- You could need approval, or to follow special rules, for works not listed here - so always research your particular project.
- What is a Notice of Transfer
A notice of transfer is a document that is used to inform the landlord/managing agent/management company when the ownership of a property changes hands. It is also known as a notice of assignment. The lease may require that the new leaseholder must notify the landlord/managing agent/management company when the ownership of the property changes hands. The leasehold information pack or information form (LPE1) should describe how notice is to be given, and whether any fees need to be paid to the landlord to accept the notice.
It is the buyer's solicitor who prepares and serves notice as part of the legal work that they undertake and there is usually a fee payable to the landlord/managing agent/management company.
It is common to send a notice of charge (also known as a notice of mortgage) along with the notice of transfer to the landlord/managing agent/management company, to inform them of any new lender. There are usually separate fees for each notice to be paid.
- What is a Notice of Mortgage
A notice of transfer is a document that is used to inform the landlord/managing agent/management company when the mortgage or charge on a property is changed. It is also known as a notice of charge. The lease may require that the new leaseholder must notify the landlord/managing agent/management company when the charge/mortgage on the property changes. The leasehold information pack or information form (LPE1) should describe how notice is to be given, and whether any fees need to be paid to the landlord to accept the notice.
It is the buyer's solicitor who prepares and serves notice as part of the legal work that they undertake and there is usually a fee payable to the landlord/managing agent/management company.
It is common to send a notice of transfer along with the notice of transfer to the landlord/managing agent/management company, to inform them of a change of ownership. There are usually separate fees for each notice to be paid.
- What is a Transfer of Equity
A transfer of equity is a change in the legal ownership of a property by either adding or removing a person from the deeds. This could be by adding or removing someone (or multiple people) from the property’s title. Equity means the amount, or value, of your interest in a property after any outstanding mortgage or other debts have been discharged. A transfer of equity does not necessarily involve any money being transferred between parties.
A transfer of equity may be for several reasons, including, but not limited to:
- The breakdown of a relationship. If you’re separating from your partner, you’ll need to divide up your assets – and the home will often be the most significant one.
- A new relationship. You might have bought the house yourself and later entered a relationship. A transfer of equity could add your new partner to the deeds.
- Buying out the equity of a joint owner. More and more people are buying properties with friends or family. The time may come to buy them out.
- For tax purposes. Home owners sometimes transfer equity to their children or other family members to be more tax efficient. It can be seen as a gift, but always seek advice about your tax liabilities.
- Transfer of inherited property to joint/sole names
- What is shared ownership
Shared ownership is a scheme offered by some housing providers that allows you to buy a share of a property, and then pay rent on the remaining part. It can be a more affordable route – compared to buying a home outright – for first time buyers, or those that don’t currently own a home, to get onto the property ladder. It is aimed at first-time buyers who may be struggling to obtain an outright mortgage.
All shared ownership homes (houses and flats) are leasehold properties.
Different providers will offer differing shares in their properties, but you’ll usually have the opportunity to buy a share between 10% and 75% of the home’s full market value. You also may have the opportunity to “staircase”, ie, purchase higher percentage of the property. Some housing associations will also allow a final staircasing, ie, purchasing 100% of the property.
For example, if you purchase 50% in a property, you would obtain a mortgage for 50% of the value of the property (your own deposit will usually be between 5% and 10% of the share you’re buying (not the full market value of the property)). The rest of the property would be owned by a landlord, and you would pay rent to them for the share that they own.
In addition to your mortgage and rent payments, ground rent and service charges may be applicable, for example, for maintaining communal areas.
- What is staircasing
Staircasing is the process of purchasing additional shares in a shared ownership property. By doing so, the owner can increase their ownership percentage, and (by reducing the landlord’s ownership percentage), reduce the rent they pay. This may be increased till they own the entire 100% of the property. The terms of staircasing will be contained in the shared ownership lease entered into at the time of purchase.
- What is a Certificate of Compliance
A Certificate of Compliance is needed by the Land Registry as proof that the Buyer has complied with the necessary requirements, so that the restriction can be taken off the title, or it remains there but has been complied with to allow registration.
Without the removal of the restriction, the Buyer cannot register their interest in the property and obtain their title.
While these restrictions are usually required during the purchase of leasehold titles, it is possible that they are needed for freehold transactions as well.
- What is a Deed of Covenant and how do I sign it
A Deed of Covenant is a legal document which states that the leaseholder agrees to undertake an obligation or series of obligations laid out by the freeholder (or landlord).
The Deed is essentially the document that lays out the covenants (or promises) that should be adhered to when a new leasehold property owner takes control.
Having this document in place serves to protect the freeholder and management company as leaseholders are legally bound by the clauses.
Covenants are broadly divided into 2 types, positive and negative.
The Deed of Covenant will typically be attached to the lease or form part of the same documentation leasehold management pack. It will be included in the leasehold management pack alongside the LPE1. There is a fee to be paid to the management company/landlord for receipting this document and the Certificate of Compliance could be contingent upon receiving this.
The document is signed by incoming leaseholder, with the addition of their signature, full name and date of execution.
- What is a Restriction
A restriction prevents a disposition (sale, transfer, gift or new mortgage) of the property being registered unless certain conditions are fulfilled. If the terms of a restriction are not complied with, the Land Registry will not register the disposition.
Restrictions are generally used for two reasons. However, this list is not exhaustive:
- To protect the interests of a third party (not the registered owner) e.g. a beneficiary
- To ensure that the owner of the property complies with certain conditions before the property is disposed of.
You solicitor will advise you of the steps necessary steps required to obtain a certificate of compliance, which will allow the Land Registry to register the property and either remove the restriction or leave it on the title but allow the registration.
Mortgages
What is a mortgage
A mortgage is a loan provided by an organisation, usually a bank or building society, for the purpose of purchasing a property. There are various types of mortgages – repayment, interest only, fixed rate, variable rate, tracker mortgage etc.
The lending organisation will require their first charge to be registered on the title, unless this is agreed otherwise.
- Does my conveyancer deal with my mortgage
In most cases, your conveyancing solicitor also represents your mortgage lender and will also deal with their requirements. There is usually an additional fee to be paid to your solicitors for dealing with the mortgage lender and their requirements.
In certain circumstances, the lender may have their own representation. This is known as a “separate representation” matter. The lender will instruct their own solicitors, who will contact your conveyancing solicitors. You may be liable for the costs of the lender’s solicitors as well.
- What is bridging finance
Bridging finance is a short-term loan that is typically secured against the property or land being purchased, or against another property or land that the borrower owns. The loan is repaid when the property or land is sold or refinanced on to a development loan. Bridge financing is also used to fulfil a company's short-term working capital needs.
The loan is designed to provide funding quickly, usually within 3-4 weeks, and is typically repaid within 12-18 months. Bridging finance can be used to finance a wide range of property-related projects, including property development, refurbishment, and conversion.
It should be noted that it is interim financing option used by companies and other entities to solidify their short-term position until a long-term financing option can be arranged.
- I am selling/remortgaging my house and I have a mortgage from the Homes and Communities Agency (Help to Buy), what do I need to do
The government introduced the Homes and Communities Agency (Help to Buy) Equity Loan scheme to assist first time buyers and homeowners in 2013. This came to an end in 2023.
There are three main ways in which you can redeem your loan as follows:
- Remortgaging
- Personal savings, further loan/mortgage or a gift from family
- Selling your property (you must redeem the loan in full)
The first step is to visit the Help to Buy website. Here all the specific forms and details are easily identified and the steps are explained below. Help to Buy are represented by a company called Target HCA. The following link will take you directly to the website. https://www.myfirsthome.org.uk/iwantto/redeem/
You will need to obtain a RICS valuation of your property. The criteria for this can be found directly on the Help to Buy website and you can also use the following website to look for a particular company. www.RICS.org.uk .
A valuation report will be prepared which is valid for 3 months. If this time elapses you may need to carry out another valuation on your property.
You will then need to instruct a solicitor to redeem the mortgage. You must inform your solicitor at the outset that your remortgage includes the redemption of a charge with Help to Buy.
To initiate the redemption process you need to complete the relevant form. Within the initial instructions on the My First Home website there is a Loan Redemption Form. You must complete and return this form to Target HCA, enclosing the administration fee required. The form will ask details of the Solicitors who are acting and also your RICS valuation report.
The solicitors will then receive a redemption pack and carry out the relevant due diligence and take the necessary steps to redeem the mortgage.
- How do I sign my mortgage deed
A mortgage deed must be signed in the presence of an independent adult witness. You will need to sign the mortgage deed where indicated in the presence of your witness.
Your witness must then sign and print their name, address and occupation where indicated on the mortgage deed.
Your witness must be over the age of 18 and cannot be related to you. Your witness could be a friend, neighbour or work colleague, as long as they are not a relation.
If your mortgage is in joint names with another person, each person named on the mortgage offer mut sign the mortgage deed and each signature should be witnessed separately. The witness can be the same person, however.
For example, Mr and Mrs Smith are named on the mortgage offer and so both Mr and Mrs Smith will need to sign the mortgage deed. Their neighbour Miss Jones is going to witness their signatures. Miss Jones will sign and print her name address and occupation on the mortgage deed twice. Once next to Mr Smith’s signature and for a second time next to Mrs Smith’s signature.
Once the mortgage deed has been signed and correctly witnessed, the original deed needs to be posted back to the office. The deed should not be dated. The deed will be dated by your conveyancer on completion of the transaction.
Surveys
What is a property valuation/survey
A Valuation Report will help to determine the market value of a property through a basic property inspection. A property surveyor will look at the property’s location and condition. A valuation report will provide an impartial look at the property's true market value to learn if what you're paying for it is accurate. It can help to highlight any issues both with the property and legally that may need to be investigated. However, it’s important to note that a valuation report is not a house survey.
A property survey is an assessment of the condition of a property. There are several kinds with varying levels of detail, but the main two are the Homebuyer Report (Level 2 Survey) and Building Survey (Level 2 Survey), both of which are defined and regulated by the Royal Institution of Chartered Surveyors (RICS).
The purpose of a property survey is to flag up any issues, or potential issues, in a property before you buy it. The contents of the survey will vary depending on the type you get, but it will look at things like building structure, the presence of issues like damp or pests, and information on the local environment, such as drainage. A property survey is carried out by a qualified Building Surveyor.
- What is the difference between a property valuation/survey and the lender’s mortgage valuation?
Where you are obtaining a mortgage, they will always conduct a mortgage valuation to ensure that their loan is proportionate to the value of the property. It is important to note that a valuation report is not the same thing as a mortgage lender’s valuation. A property valuation is a relatively in-depth report about a property’s worth and the factors that determine it, whilst a mortgage valuation is a brief inspection that a mortgage lender carries out to check a property is worth what a buyer is going to pay for it.
- Can my conveyancer advise on the contents of a survey?
Your conveyancer is not qualified to answer questions which arise from a building survey, unless they arise from the section marked specifically for the conveyancer/solicitors to check.
If questions come out of the survey, your conveyancer may however raise these as enquiries of the seller. Your solicitor will not be able to air a view on the building survey as their job is the legal side of things.
Deposits, fees and purchase funds
When do I need it pay my deposit
You pay your house deposit the before the exchange of contracts. Most solicitors will require these funds to have cleared two working days before the exchange of contracts. The amount of deposit you pay is 10% of the agreed purchase price (excluding any agreed fixtures), however you can agree to pay a lower amount.
On a new build you may pay a reservation deposit on instruction. This will be deducted from the deposit you need to pay on exchange of contracts
- Do I need to pay a 10% deposit on exchange
Yes, the deposit of 10% of the purchase price is paid on the exchange of contracts. However, this can be changed by agreement. Where you are in a chain of transactions, the deposit could be less than 10% of the purchase price.
The Standard Conditions of Sale (5th Edition – 2018 Revision) provides that where 10% of the purchase price is not paid at exchange, it is still due to the seller, should the transaction not proceed.
- What is source of funds?
To comply with our obligations under statutory guidance, we are required to obtain documentary evidence and an explanation from the homebuyer as to how the monies which are being used to fund the purchase of the property have accumulated.
- Why am I being asked about the source of my funds?
To comply with our obligations under statutory guidance, we are required to obtain documentary evidence and an explanation from the homebuyer as to how the monies which are being used to fund the purchase of the property have accumulated.
- What are the rules on a gifts?
A giftor who is contributing some of their own money towards the purchase of a property will always have to sign a giftor’s declaration. Within the declaration, the giftor will confirm that the gift is unconditional and not repayable. They will also be declaring that they will not either have or be able to claim an interest in the property that is being purchased. The declaration will need to be signed by them in front of a witness.
If you are buying a property with a mortgage there may be additional requirements that the Conveyancer will have to consider depending on the individual lender. In addition, the giftor/s will have to pass the same Anti Money Laundering and ID checks as the person who is buying the property.
- What is a gifted deposit?
A Gifted deposit is monies given to the homebuyer from a third party (often a relative) to help towards funding the purchase of a property.
- I am being gifted money to buy a property, does my conveyancer need to know about that
Any gift of monies whatever the amount, must be notified to the conveyancer. If the property is being bought with the assistance of a mortgage, the lender will also need to be aware.
- What are fees
The term fees refers to the costs that the you will pay in respect of the legal work the conveyancer undertakes during the course of the purchase or sale of the property. Upon confirming that you wish us to act on your behalf in relation to your sale and/or purchase, you will be provided with details of the legal fees and disbursements.
- What are disbursements
Disbursements are out of pocket expenses which are incurred on your behalf to a third party, whilst conducting the sale or purchase. An example of a disbursement would be a fee payable to HM Land Registry.
- When do I need to pay for my legal fees
We will require payment of the legal fees prior to completion. With some types of transaction, you will be required to make an interim payment of fees prior to exchange of contracts. The conveyancer will notify you when payment is required and will send you an itemised breakdown of all fees and disbursements incurred in the form of a completion statement. At the same time, they will advise a you when payment is required.
HTB and ISAs
What is a Help to Buy ISA?
A first-time buyer can use a Help to buy ISA as a savings tool towards their purchase. Although you can no longer open a new HTB ISA after 30th November 2019, an account that has already been opened, can be saved into until November 2029. The government provides a Help to Buy bonus of 25% on the amount saved in the ISA up to £3,000. The bonus can only be drawn down if the Help to Buy ISA process has been followed correctly and relevant conditions have been met.
- Can I use my Help to Buy bonus towards my deposit/for exchange?
Unfortunately, you cannot use the bonus element of a Help to Buy ISA towards the deposit on exchange. It also cannot be used for stamp duty, disbursements or legal fees. The rules of the scheme provide that the bonus can only be applied towards the overall purchase price at completion.
- What is a Lifetime ISA (LISA)?
A Lifetime ISA is a savings tool which can be used towards the purchase of a 1st home or towards planning for retirement. You can add up to £4,000 per annum to the LISA and for every £4 saved in the account, the government adds £1.00. There are eligibility requirements, and a process must be strictly followed by both you and the conveyancer to withdraw the funds in time for use.
Unlike a Help to Buy ISA, the Lifetime ISA can be used towards the deposit, provided the property purchase is completed within 90 days of your conveyancer receiving the Lifetime ISA funds. If longer than 90 days, the conveyancer would need to write to HMRC for an extension.
Joint Ownership
What are beneficial joints tenants?
When two or more people own a property, they can choose to own the property as beneficial joint tenants or as tenants in common. Where co-owners hold the property as joint tenants, each co-owner is considered to own the whole of the property equally.
On the sale of the property, each owner will be entitled to receive an equal share of the sale proceeds regardless of their individual contribution to the purchase price, mortgage repayments or household expenses. In the event of the death of a co-owner, the survivor or survivors will receive the deceased joint tenant’s interest in the property and he, she or they will become the owner/s of the whole of the property regardless of the terms of any Will the deceased may have written.
- What are tenants in common?
When two or more people own a property, they can choose to own the property as beneficial joint tenants or as tenants in common. Where co-owners hold the property as a tenants in common each co-owner holds a separate and quantifiable proportion of their interest in the property. The interest can be held in equal shares, or if one party is contributing more money towards the purchase, the interest could be held in unequal shares to reflect the proportions contributed.
In the event of death of a co-owner, their distinct share in the property passes to either a named beneficiary under the terms of the deceased’s Will or under the laws of intestacy to the nearest defined relative should there be no valid Will.
- What is a deed of trust?
A deed of trust (also known as a Declaration of Trust) in the context of buying a property, is a legal document often used to record the respective shares of co-owners. It can also be used to reflect one co-owner’s initial contribution towards the purchase price and other requirements such as the parties’ responsibilities towards outgoings i.e. mortgage payments during property ownership. It can be useful to have a Deed of Trust to refer to in the future, to avoid disputes further down the line.
- Can property be owned in different shares?
Yes, if co-owners choose to hold the property as a tenants in common the beneficial interest in the property can be owned in different shares and the terms of their agreement recorded in a Deed of Trust.
Exchange of contracts
What happens at exchange of contracts?
Exchange of contracts is usually a phone call or a series of phone calls (if there is a chain) between the parties’ conveyancers confirming that the parties are happy to proceed with the transaction and commit to a completion date. The completion date will either be a fixed date or on notice if the property is a newbuild. Upon exchange of contracts, the seller and buyer who are party to the contract are legally committed to complete the transaction. Past the point of exchange neither buyer nor seller can pull out of the transaction without possible legal consequences.
- I am in a chain, what does this mean?
A chain means that there are several transactions which are dependent on each other in order to achieve successful completion of each connected sale and purchase. Several ‘links’ (transactions) in the chain can make the conveyancing process particularly complicated.
- Can I get access to the property after exchange?
Generally, the buyer will not be able to access the property until the purchase has completed. Up until this point the seller still legally owns the property. A buyer can however ask the seller if they will consent to this if for example minor works are required to the property. If the seller does agree, they will ask that the buyer agrees to a ‘key undertaking’. The key undertaking makes it clear the terms upon which access is being granted and that the buyer has no right of occupation or possession of the property.
- Should I inspect the property before exchange of contracts?
Yes, it is advisable to inspect the property before exchange of contracts to ensure that you are happy with the purchase you are about to make.
- How long is there between exchange and completion?
There is no defined time between exchange of contracts and completion. The length of time in between can depend on several factors including how many parties are in the chain, what the individual parties are happy to agree to in view of their own circumstances and the type of property that is being purchased. If the transaction involves a new build property there can sometimes be months between exchange and completion. If there is a transaction which has no chain, it is possible to exchange and complete on the same day.
Buildings Insurance
When should I start my buildings insurance policy on a purchase?
If you are to be responsible for the building’s insurance your conveyancer will advise you when the policy should commence. Upon exchange of contracts, building insurance usually falls to the responsibility of the buyer. The insurance must cover the cost of rebuilding the entire property if it is destroyed and your mortgage lender may want to see proof of this insurance.
- When do I cancel my buildings insurance on my sale?
Although it is usual under the terms of the contract of sale for the obligation of insuring the property to pass to the buyer upon exchange of contracts, the seller should maintain their insurance until completion.
Completion
What is completion
Completion is the day that ownership of the property is transferred from the seller to the buyer. At the point of completion, the property legally belongs to the buyer. Once completion has taken place, the seller must vacate the property, and the buyer can move in.
- What happens on completion
On completion, the buyer’s solicitor transfers the purchase money to the seller’s solicitor.
Once the seller’s solicitor has received the funds, they confirm completion and contact the estate agent to confirm that the keys can be released to the buyer.
If you are selling a property, we must wait for the funds to arrive from the buyer’s solicitor before we can then transfer the purchase money to your seller’s solicitor.
- What time can I get the keys to my new property
You can collect the keys to your new property once completion has been confirmed and the property is vacated.
The amount of time completion takes will vary and it is not possible to guarantee a specific time that you will be able to collect the keys. This will depend on how long it takes for the funds to move from one solicitor to the next.
- Can I complete my transaction at the weekend
It is not possible to complete your transaction at the weekend, completion must take place on a weekday, between Monday – Friday.
If exchange and completion take place simultaneously, this means that exchange will take place on the day you are due to move out of the property. The contract does not become legally binding until exchange has taken place and this can create uncertainty.
- What is a simultaneous exchange and completion
It is possible to exchange and complete on the same day, and this is known as a simultaneous exchange and completion.
After completion
What is HM Land Registry
HM Land Registry register the ownership of land and property in England and Wales. They record any ownership changes, mortgages or leases that affect land.
Following completion of a purchase or re-mortgage, our Post Completion team will deal with registration and submit the application for registration to HM Land Registry.
- How long will it take to register my purchase/remortgage at HM Land Registry
There is often still work to be done during the registration process and the Post Completion team will prepare the application as soon as this is possible and submit the application to Land Registry.
Once the application is received by Land Registry, it is protected.
Land Registry have significant backlogs, and the processing times vary considerably, depending on the type of application. In most cases the process will take many months and can take over a year.
- Will you send me the title deeds to my property
Once registration is complete, if you have elected to pay for a copy of the Title Information Document, we will send you a copy of the this for your information.
Land Registry records are now digital, and title documents are stored electronically with Land Registry.
- What is a requisition
This is a request by Land Registry for further information to complete an application. It is common for Land Registry to raise requisitions during the registration process. This process can sometimes involve correspondence with other third parties, such as the other party’s solicitor or a management company.
Stamp duty land tax / Capital gains tax
Do I need to pay Stamp Duty Land Tax
You will need to pay Stamp Duty Land Tax (SDLT) if you buy a property or land over a certain price in England and Northern Ireland. If the property is in Wales, you will pay Land Transaction Tax (LTT).
- When do I pay SDLT on my purchase
The current SDLT thresholds are:
- £250,000 for residential properties
- £425,000 for first-time buyers buying a residential property worth £625,000 or less
- £150,0000 for non-residential land and properties
You will not pay SDLT if you buy a property for less than the threshold.
How much SDLT you are required to pay will depend on a number of factors, for example, whether you are eligible for any relief or exemption, if you already own a property; or if you are not a UK resident.
You can use our Stamp Duty calculator to work out how much SDLT you will pay here.
SDLT must be paid within 14 days of completion, and we will request the SDLT payment as part of your final balance. We will file the return on your behalf and pay the SDLT following completion.
- What is Capital Gains Tax and can you advise me on this
Capital Gains Tax is a tax on the profit when you dispose of an asset (which includes property that is not your main home) that has increased in value. The gain that you make is taxed, not the amount of money you receive. You only have to pay Capital Gains Tax on your overall gains above your tax-free allowance.
We are not able to provide taxation advice and would recommend that you speak to tax specialist for any advice required in relation to Capital Gains Tax and your potential liability.
New build property
I am buying a newbuild property, how does this differ from buying a non-build property
The conveyancing process for a new build property is often more complex than the conveyancing process for existing properties and there are a higher number of risks we must manage.
When buying a new build property, the developer will impose an exchange deadline, which is usually 4 weeks from the date that the plot is reserved.
New build property is often still under construction, and you will often not be able to see your completed property before contracts are exchanged.
There is a large volume of documentation that must be considered during the process. This includes the usual searches and paperwork required for other property transactions, however there will be additional documents relating to planning, building regulations, new roads and sewers. These are all issues which can add complexity.
A fixed completion date is often not given on exchange and there could be delays in the build process, leading to a lengthy wait for completion. This may have an impact on any mortgage, as most offers are only valid for a period of 6 months, and on any related sale transaction.
Completion usually takes place 10 working days after the developer has finished the building work and the property has been signed off by Building Control.
When registering a new build property, this involves the creation of a new title number and title plan by the Land Registry and therefore falls within the Land Registry’s complex cases criteria. The registration process can therefore take many months, and over a year in a lot of cases.
- What does completion ‘On Notice’ mean
In a standard conveyancing transaction, at the point of exchange you agree a specific date for completion with your seller. This is not possible on the majority of new build transactions.
This is because many new build homes are still being constructed at the point of exchange.
In these circumstances, exchange will instead take place ‘on notice’. This means that once the property is ready and has been signed off by Building Control, the developer’s solicitor will send a completion notice to us.
From the time of the notice being provided, completion must then take place within a specified period- this is usually about two weeks before completion (although it can be longer or shorter than this and will be confirmed in the contract).
Completion ‘on notice’ can mean that there could be many months between exchange of contracts and the completion date.
- What is an NHBC certificate
This is a warranty and insurance cover for new build homes. NHBC warranties are issued by the National House Building Council. The warranty covers new build property and is taken out by the developer.
Most new build warranties, including NHBC last for ten years. For the first two years after legal completion, your builder will be responsible for repairing defects. After two years have passed, NHBC provides insurance cover until the expiry of the policy. Only structural issues will be covered after the first two years and therefore any non-structural issues will be your responsibility.
You will be provided with the NHBC certificate and the policy booklet following completion. It is important to read these documents carefully and to keep them safe. If you sell the property before the warranty has expired, it can be transferred to the new owner.
NHBC are one of the most commonly used warranty providers for new build homes, however there are other providers, including Premier Guarantee and Local Authority Building Control Warranty.
- How do I get a copy of the title documents, planning and building regulations approval for my newbuild property
Once registration is complete, if you have elected to pay for a copy of the Title Information Document, we will send you a copy of the this for your information. This will be stored electronically at Land Registry.
A copy of any planning and building regulations documents that we have received from the developer’s solicitor will be sent to you with the Report on Title.
- What is a snagging list
A snagging list is an inspection carried out on new build properties to find any issues or ‘snags’. For example, cracked paint or missing door handles.
Once you have compiled a snagging list, you can request that the developer completes further work to fix any issues that may have been missed or damaged in the building process.
Whilst you can carry out the check yourself, it is possible to instruct a chartered surveyor to conduct an inspection.
- Can the developer change the position of the boundaries of my new property
The contract will usually entitle the developer, upon giving you reasonable notice, to relocate, replace, erect or reconstruct any boundary, wall, fence or other boundary structure at the property; providing that these alterations do not result in material detriment to the purchaser. If the proposed change to the boundaries would significantly alter the size, appearance or value of the property, the developer is required to consult the purchaser regarding the proposed change and if the purchaser does not consent to the change, the contract will contain provisions regarding the purchaser’s right to terminate the contract. It is not possible to claim compensation or damages from the seller as a result of any change to the boundaries.