First Time Buyer Q&A
With the recent changes to stamp duty, the property market has received a welcomed boost, which has resulted in us seeing a surge in property transactions.
The changes to stamp duty have also allowed for a large number of first time buyers to come into the market and purchase their first home.
To assist first time buyers in understanding how a property transaction works, we carried out an interview with Jonathan Bishop, who is one of our Partners who specialises in conveyancing.
What is conveyancing?
Conveyancing is the legal process in which the ownership of a property is transferred from one party to another, whether that is Seller to Buyer, or Landlord to Tenant.
Why do I need a lawyer to buy a property and what do they do throughout the whole process?
A lawyer is a qualified individual who is entitled to provide legal services. They will guide you from start to finish of a transaction, as well as carefully examine the legal paperwork and ensure the property has a good and marketable title for you to buy. A lawyer’s role does not finish on completion of the purchase. They will also deal with your stamp duty return and registration of your ownership at Land Registry.
When should I instruct a lawyer?
Once you have agreed a purchase with the Seller, usually through an estate agent. The estate agent will require details from both parties of their chosen lawyer so that sales memorandums can be issued and both party’s legal representatives can contact each other.
What is stamp duty and how much is it?
Stamp Duty is a government tax that is charged as a percentage of the purchase price of a property. The percentage is calculated on a tiered system. The amount charged also depends on whether you are a first-time buyer, buying a main residence or an additional property.
How long does it usually take from start to finish and what are the stages?
There is no set time period, as timings depend on the merits of each transaction, as well as the speed in which all parties can move. As a rough rule of thumb and on the basis, everything proceeds as normal, an average time to exchange is 3/4 weeks from when the Buyer’s solicitor receives contract papers.
What is Land Registry and where does it fall into my transaction?
Land Registry is the body that records the ownership of registered land in England and Wales. At the start of the transaction we check the Seller’s ownership (“title”) at Land Registry and also what matters are registered against that title that would affect an owner’s use of the property and whether the seller has a good marketable title. Once the transaction completes, your lawyer sends the legal documentation to Land Registry, so that your ownership of the property is officially recorded with them.
How much are your fees?
There is no set fee that covers all transactions. Our fee is based on several factors, including the type of property purchased and the purchase price. Further details can be found on our website using the following link https://www.yvasolicitors.com/service/residential-property/
Are there any additional fees?
Yes, these are known as disbursements and include items such as your stamp duty, Land Registry fees and search fees.
What is a survey, and do you recommend I get one?
We always recommend you enquire with a surveyor about obtaining a survey and they will advise what type of survey is best suited for the property you are purchasing. The purchase of a property is a big investment and it is important to check there are no underlying issues that could be costly after you have completed.
What are searches and why do I need them?
The standard searches we obtain are a Local Search, an Environmental Search and a Drainage & Water search. Additional searches may be required, depending on what is revealed in these search results, as well as where the property is located. The searches are carried out to check whether any matters are recorded with third parties, such as the Local Authority, Water Company and Environment Agency, which may have a negative effect on the property or its value.
Are there any documents I need to sign and at what stage do I sign them?
The main documents are the contract and if you are obtaining a mortgage, the mortgage deed. The contract is the document that contains the key terms for the purchase and records a legally binding agreement between the Buyer and Seller in respect of the sale of a property. The mortgage deed is provided by your mortgage lender and is used to register what is known as a “legal charge” on your property. This protects the lender’s interest, including the funds they have lent you for the purchase and prevents a change in ownership of the property without repaying the mortgage loan.
What is the difference between exchange and completion?
Exchange is the date that both Seller and Buyer enter into a legally binding contract to buy and sell the property. It will also record the completion date. Completion is the date recorded in the contract, where the Buyer pays the balance purchase price to the Seller and in return the Seller transfers their ownership of the property to the Buyer.
What is the difference between freehold and leasehold property?
Freehold land is a permanent tenure of land. When you own a freehold, you will own both the property and the land it is built on. Leasehold land is not permanent ownership and is granted for a term of years to the leaseholder. As a leaseholder you will own the property for the term of your lease, subject to any extension of that lease. You will own a property in a building, but will have no ownership of the building in which it is in. A leasehold property will have a lease, which contains details of the term granted to the leaseholder, payments required to the freeholder, as well as covenants (a promise to do or not to do something) and regulations that must be observed by the leaseholder. As a general rule of thumb, the majority of houses are freehold and the majority of flats are leasehold.