Buying a house is one of the most significant investments that most people make in their lifetime. Whether you are a first-time buyer or an experienced property investor, the process of buying a house can be daunting and complex. In addition to finding the perfect home, there are numerous legal considerations that you need to keep in mind when purchasing a property, but that is where your solicitor comes in. As experts in conveyancing, they will know the property market and the processes involved in buying your dream property.
If you are buying a house in England and Wales, there are several important legal aspects that must happen to ensure a smooth and successful transaction. In this article, we will outline eight legal issues that your conveyancer will assist you with when buying a house in England and Wales to help you navigate the process with confidence.
1 – Conveyancing
Conveyancing is the name of the legal process of transferring the ownership of a property. You should engage with a solicitor to handle the legal aspects of the transaction, as it can be complex, and there are clear procedures that need to be followed. It is essential to work with a qualified solicitor or conveyancer who can handle the legal aspects of the sale, including the drafting and review of contracts, the transfer of funds, important examination of the ownership documents (the “title”) and the registration of ownership with the Land Registry.
2 – Property searches
Your solicitor will carry out a range of property searches to check if there are any potential issues with the property which could affect your use or enjoyment of the property. These could identify, for example, whether the property is listed, subject to a tree preservation order or whether there are highways or planning decisions that could affect the property. Once these searches have taken place, the solicitor will report back to you about any issues they found, or if there is any cause for concern.
Please do note that these are a mandatory requirement for nearly all mortgage lenders and your solicitor is asked to deal with these by the mortgage lender.
3 – Stamp duty
Stamp duty is a tax that you need to pay when you buy a property over a certain price. The rules and rates for stamp duty vary depending on the value of the property and other factors. Your solicitor will normally deal with the sending of the Stamp Duty tax return form and the payment of the Stamp Duty on your behalf to the Inland Revenue.
4 – Exchange of contracts
Once your solicitor has examined and negotiated the terms of the contract with the seller’s solicitors and reported to you, the purchase will be ready to exchange. The exchange is the point at which the buyer becomes legally committed to buying the property and the seller is legally committed to selling it. Your solicitor will explain the terms of the contract to you and the implications of the exchange of contracts. This is the point at which you will normally have to pay the sum of 10% of the purchase price as a condition of the exchange of contracts.
5 – Completion
At completion, the full purchase price, taking into account any deposit paid at exchange of contracts, is paid to the seller and the buyer becomes the owner of the property. Your solicitor will also have obtained the mortgage monies and any balance from you to be able to have the full purchase price ready to complete. Your solicitor will tell you when this has happened, and you will be able to collect the keys from the estate agent.
Your solicitor will then also deal with the payment of Stamp Duty, on your behalf, and the application to Land Registry to register you as the new owners.
6 – Property ownership
There are two types of property ownership in England and Wales: freehold and leasehold. Your solicitor will carry out a search of the Land Registry to find out whether the property you are buying is owned on a freehold or leasehold basis. Your solicitor will explain the implications of this to you and any obligations that you might have to fulfil if you buy the property. if the property is leasehold then your solicitor will have conducted more work in examining the Lease and the obligation contained in the Lease.
7 – Mortgage
If you need to take out a mortgage, it is important to understand the terms and conditions of the mortgage. Your solicitor will check through the mortgage offer and will need to comply with the mortgage lender’s conditions, such as conducting searches and obtaining the mortgage lender’s approval for any issues found.
8 – Property Insurance
Once you have exchanged contracts and certainly when you complete you must obtain insurance for the property. This is usually a minimum of buildings insurance and is a requirement of the mortgage lender. Your solicitor will ask for a copy of the policy to check it meets the mortgage lender’s requirements.
This is not legal advice; it is intended to provide information of general interest about current legal issues.