Instructing a Solicitor: One of the key parts of buying any house or flat is instructing a solicitor to carry out the legal transfer of the property from the seller.
Needless to say, it’s important to choose the right partner here and to do your due diligence when selecting a local solicitor. Working with the right legal team means that your property purchase avoids any legal pitfalls and goes through as smoothly as possible.
Here we look at what the role of the conveyancing solicitor is, when they should get involved and what areas of the property buy they deal with.
What is a Conveyancing Solicitor?
As you might expect, buying or selling a property involves some serious legal work. For both home buyers and vendors, it’s important to hire the services of a conveyancing solicitor – someone who is experienced in handling all the legal documentation including the exchange of contracts and property rights for commercial and domestic sales.
Conveyancing solicitors do a lot more than simply print out the forms and make sure everything is legally sound. They’ll carry out a variety of searches depending on the property to make sure there are no hidden legal issues in the background that you need to be aware of.
Can I Do the Conveyancing Myself?
The short answer is yes. The longer answer is: Why would you want to?
If you have some legal expertise then it may offer a decent cost saving but otherwise, you should be employing the services of a qualified solicitor. If things go wrong, and you’ve done the conveyancing yourself, there’s nobody else to blame.
Solicitors need to have insurance so if there is a problem (for example, if contracts weren’t exchanged in time), you have a quicker route to resolution and getting your money back or compensation. Particularly for first-time buyers, it’s essential to have a good conveyancing solicitor on your side.
Completing the Full Mortgage Application
You should probably start looking around for a solicitor as soon as you start house hunting – it will give you time to check out several options and do your research. You will only think about instructing a solicitor once you put your full mortgage application in (you usually need to include their contact details on the application).
Once you have put your full application in and there is an agreement in principle, the mortgage company will then want to undertake their own property valuation. This is basically to ensure that the amount of loan you are asking for matches the true value of the property.
RICS Valuation
The Royal Institute of Chartered Surveyors is essentially the governing body for all surveyors and stipulates how valuations should be carried out. An RICS registered surveyor will be used by the mortgage company to visit the property and take a closer look at it and they will follow the institute’s rules.
Standard Valuation
A standard valuation may be carried out if the property is in a well-known area and there is considerable information on the average prices. A mortgage provider may not need to look further than local listings and price information for the area where you are buying.
In more detail, if the property was built over the last 150 years, the RICS registered surveyor will look at its general condition and look at areas such as the quality of the damp proofing, drainage and insulation.
Structural Valuation
If there are potential issues with the property, the lender may well ask for a deeper, structural survey that will go into all areas of the construction in much greater detail. That might include looking at what materials the property is constructed from, the joinery such as windows and doors, and the surrounding site.
Don’t forget that the mortgage company wants to safeguard its investment – if you aren’t able to meet the repayments at some point and the property needs to be sold, that sale must cover the money that was loaned.
Mortgage Offers
Once the survey has been done and the lender has checked your application and they are happy, they will make you a firm mortgage offer. This is usually open for a set period – normally around 3 months, during which you will be expected to complete the buy and exchange contracts.
If you are purchasing a property as a first-time buyer and you are taking part in the Help to Buy scheme with a newly built home, you can often get up to six months to complete.
What It Means for You
Once the mortgage offer has been made and you are happy with it, you can now proceed with instructing your solicitor to carry out the searches and completing the paperwork for the property sale. Your conveyancing solicitor will work closely with the vendor’s legal team to set the dates for exchange and get the contracts ready.
What Happens When a Mortgage Offer is Revised?
In most cases, the mortgage offer is similar to the agreement in principle that the lender will have made previously and there should be no problems. In some instances, however, the mortgage provider may revise their offer.
This can happen for several reasons. The most common is that the valuation survey turns up an anomaly such as the asking price being much higher than the actual value the surveyor has decided on. Another reason might be if there is a structural issue with the property that could devalue it in the future.
This can cause huge problems, of course. You either have to get the vendor to lower their price or you accept the mortgage reduction and try to find the balance somewhere else. The good news is that this kind of situation tends to happen more with re-mortgaging than new property buys.
What Does a Conveyancing Solicitor Do?
Once all the lending issues are sorted, the conveyancing solicitor will start the process of exchanging contracts with the vendor. The first part of this is carrying out legal searches which ensure there are no underlying problems with the sale that may impact you as a buyer.
What Searches are Needed?
There are three main types of searches that your conveyancing solicitor will carry out: local authority searches, environmental searches and a drainage and water search. Let’s take a look at these more closely:
1. Local Authority Search
Your mortgage deal may well be subject to the result of local authority searches. These have two components.
A Local Land Charges Register Search Or LLC will tell you whether the property is listed which can make a big difference to what sort of work you can carry out on it. The same applies if your home is in a conservation or tree preservation area. There may also be conditional planning permissions in place for your area. This can all have an impact if you want to, for example, add an extension to the property in the future.
The other component is called CON29 which looks at the property’s planning history and whether there are any major works earmarked for construction in the local area – the last thing you want is to buy a new home and then find out that the council will be building a major new road right outside your front door. This search also looks at the building regulations history for the property.
2. Environmental Search
An environmental search is particularly important if you are buying a newly built property. It essentially looks at the land your property is constructed on and the surrounding area.
For example, it may look at whether your home was built on contaminated land such as a landfill that may cause issues over time. With climate change worries, it’s also important to also check whether your home sits in a potential flood area as this could certainly damage your mortgage application as well as your chance of getting insurance for your property.
The search will look at various components such as the history of the land use around your property, whether there are traces of toxic gases or waste, and identifying the flood risk and potential for subsidence.
3. Drainage and Water Search
The final search relates to drainage and water and looks at local elements such as the local sewers. This will reveal, for example, whether your home is attached to the main sewer system, how you are connected to the water supply and how you will be charged for this.
For most properties, this is a general and cursory undertaking but if you are buying a home, for example, in a remote area, it is extremely important.
Title Searches
The other important part of the conveyancing process is the title search. This ensures that the property is owned by the vendor and is theirs to sell or whether there are third parties who are involved in the title. You’ll get information on previous owners and how much they bought the property for. It will look at the location and determine whether there are any issues, for example, with a right of way near the property.
Do I Have to Pay Stamp Duty?
Stamp Duty is a tax you may have to pay on the property purchase if it is over a certain price. This can be quite a hefty chunk of money for buyers and needs to be factored in when you are first starting to save for a property.
The good news is that first-time buyers have much more leeway when it comes to Stamp Duty.
From the beginning of July 2021, first-time buyers will pay no Stamp Duty on homes that are valued under £300,000. Above this, the duty is charged at 5%. For example, if you buy a property worth £400,000, you will pay nothing for the first £300,000 but £5,000 for the additional £100,000.
If you do need to pay Stamp Duty, your solicitor will inform you and will arrange to process it within a few days of the exchange of contracts.
Exchange of Contracts
The most exciting but equally stressful time for first-time buyers is the exchange of contracts. This is where the buyer’s solicitor and the vendor’s solicitor swap signed contracts and the buyer pays a deposit. This marks the end of most of the negotiations.
There is no backing out once it is done – it’s legally binding and essentially means you have agreed to buy the property. You are now a new homeowner.
The buyer needs to read all the documentation properly and ensure that they have every box ticked including something as simple as taking out buildings insurance once the contract has been exchanged.
Both buyer and seller will sign their contract and then the solicitors for both parties will arrange the exchange at a set time. This can often take place over the phone with both solicitors reading out their contracts. Once this is done, you will need to pay a deposit of around 10% with the rest of the payment coming once the deal is completed.
When the legal teams exchange contracts, they will also agree to a completion date, generally around two weeks later. Most completions (where you are allowed to finally move into the new property) take place on a Friday because it gives people the weekend to settle in and get organised. This can also be the most costly time where slots are often booked quickly. Settling for a day during the week can give you more options.
You’ll get confirmation that your mortgage and deposit are with the seller and that you are ready to go and you can move in as soon as you have collected the keys from the estate agent. At this point, unless there are any
outstanding issues, the role of your conveyancing solicitor ends and the property sale is complete.
Why Hire a Mortgage Broker Like Sterling Capital Group?
Not only is your choice of conveyancing solicitor vital when buying your first home, but working with an experienced mortgage broker is also essential.
At Sterling Capital Group, we have access to a wide range of mortgage products and can help you ensure you get the exact deal that fits your needs, not just for your initial purchase but the future as well.
Want to find out more? Contact our expert team today.