Step by step guide to buying
Once you've made the decision to buy a property there's a number of important areas to consider.
Agreeing your budget
It may seem obvious, but once you’ve made the decision to look for a new home knowing your financial position ahead of your search is important. Doing your homework can save you a lot of time, hassle and money later on.
So before you begin your search, its really important to decide:
- What your budget is
- How much you can afford to borrow
- How much equity you want to invest
- How much you need to keep aside for home furnishings and decorations
- Any reserve funds you might need for e.g a household emergency.
You should also confirm with your Mortgage Lender that they are willing to lend you the amount required for your purchase.
An “agreement in principle” or a “decision in principle” from a Lender is not a guarantee of a mortgage offer.
Our residential team can put you in touch with an independent mortgage broker who can help you get everything you need in order. Contact us for more information.
Should you buy or sell first?
There’s no right or wrong answer here. Every property transaction is different and the speed at which you sell your property may vary. In a strong market then it’s not uncommon to move out of your existing home and into your new one on the same day.
We can talk you through the pros and cons of buying first and can have one of our professional valuers assess the marketability of your existing property. Contact us to discuss this further.
Finding your ideal home
Once you’ve agreed your budget its time to start looking for your perfect home. Before you begin your search though, be sure to have some idea on the following:
- Location - consider the distance to your place of work, family, friends and local amenities. Would you prefer a city, semi-rural or rural location?
- Type of property - would you prefer a flat, semi-detached, detached house or a bungalow or even a cottage?
- Other essentials - is the property in a good catchment area, do you need childcare facilities nearby or good, quick access to public transport links?
Creating a short list of essentials will help you in your property search.
Form of offer
For property transactions in Edinburgh or Glasgow we use a standard form of offer known as the “Harthill Missive” otherwise known as a “compromise style offer” as it takes into consideration the interests of both the purchaser and the seller. We recommend using this type of offer as it is often the quickest route to concluding a contract.
The Harthill Missive includes the following:
- The price you wish to offer for the property
- Your preferred date of entry
- Any items that are to be included in the price of the property
- Damage provision (should you not pay the agreed price on entry then the seller has the right to seek damages from you).
At an additional cost we can create a tailored form of offer that can be weighted more in your favour however; the Harthill style is generally a more favoured approach.
Purchase by more than one party
Frequently we are asked to submit an offer for a property in two or more names. We can of course take instructions from all parties however this can be cumbersome and cause unwanted delay so we would recommend that you provide written authority to one designated person to issue instructions on behalf of everyone. The instructions given will be binding on all parties.
It’s also important to consider how you wish the property title to be taken; will it be in one or two names or even more? There are various options that can have significant legal consequences but our conveyancing team can provide you with all the help and guidance you need. Contact us for more information.
Preparing to submit your offer
Fixed Price Properties
Any property advertised at a “fixed price” means that the first written offer at that fixed price is likely to be accepted. If you see a “fixed price” property that catches your eye then you should move quickly and speak to your solicitor to avoid missing out.
If two or more offers from different parties are submitted around the same time, then the seller could choose to set a closing date (see closing date below).
Offers Over vs Offers Around
What’s the difference? In practice we have found that there is little or no difference. Most sellers will advertise their property at “offers over” a given price and in today’s market would then expect to receive offers well above that asking price. The asking price is therefore just a guide so it’s important to speak to your solicitor to ensure you submit an appropriate offer.
The level of your offer will depend on a number of things including:
- (a) the size of your budget
- (b) prices achieved for similar properties in the area
- (c) the amount of interest in the property, and of course, how badly you want that particular house.
If you find the right home, contact us quickly with the address of the property and we will note your interest with the selling agents. Noting interest is cost free and we’re simply advising the seller’s solicitor that you’re interested in submitting an offer.
However a seller can still sell their property at anytime regardless of whether you have noted interest so it’s important to remember that noting interest does not always guarantee you the opportunity to submit an offer.
If more than one party has noted interest in a property the selling agents will usually set a “closing date” for offers. They will notify your solicitor by telephone that they’re inviting all interested parties to submit an offer in writing by a certain time on a specified date.
A seller does not have to accept the highest or “best” offer received at a closing date. If your offer is unsuccessful then due to the guidelines issued by the Law Society, we are unable to make a revised offer unless the seller’s solicitor invites us to.
Home reports: the key facts
What are they, who pays for them and how can I get my hands on them?
A Seller is required by law to provide you with a Home Report for their property. The Home Report is paid for by the Seller and is designed to ensure the potential buyer is well informed about a property before they consider submitting an offer. The Home Report comprises three sections:
This is compiled by a Chartered Surveyor and provides detailed information on the condition of the property and issues such as accessibility. It also contains a property valuation - the price which the surveyor believes the property is worth in current market conditions.
Energy Performance Certificate
This is generally carried out by the same Surveyor who undertakes the single survey and it will provide you with an assessment on the property's energy efficiency rating and environmental impact. Improvements, if appropriate, are also suggested within the report.
The seller will also complete a property questionnaire which will include information on the council tax band, any property enhancements and alterations made, car parking, responsibility for common areas and other information relating to the property (e.g. key utility providers and servicing records for heating/plumbing systems).
If the Home Report provided to you is more than three months old you are eligible to ask the seller for a more up to date copy. Alternatively, you can still proceed with an offer under the condition that the seller provides an updated version of the report.
Bear in mind that you are still entitled to have your own valuation or survey carried out be¬fore you make an offer, and indeed if you are borrowing a high percentage of the purchase price your Lender may insist that you instruct your own survey report.
Conveyancing: what you need to know
Conveyancing involves the legal transfer of home ownership from the seller to the buyer. The process begins once your offer for a property is accepted and is completed when you receive the keys. Our experienced conveyancing team can help with the following:
- Examination of title
- Dealing with instructions from your lender
Missives is the term used for the formal letters passing between solicitors during the sale process. Missives usually comprise:
- A formal offer
- An acceptance or qualified acceptance issued by the sellers solicitors (a qualified acceptance is a letter accepting our offer but subject to certain amendments)
- One or more additional letters until both sides reach agreement
If and when we receive a written letter of acceptance to your offer, we will contact you within 24-48 hours to talk you through the next steps.
If your offer is accepted without qualification then a binding contract will exist. This is often referred to as a “concluded contract” or “concluded missives”. Until you reach that stage both the buyer and the seller have the right to pull out of the deal without penalty.
Examination of title
We will check the legal boundaries of the property to ensure you are buying what you think you are buying and that you have necessary rights of access. Examination of title also involves the search of official records relating to the property to ensure there are no issues before the transfer of title.
If buying a flat we will ensure that you are not burdened with unfair share of any common liabilities. We will also check various reports from outside bodies (e.g Property Enquiry Certificate) as well as reports on the title from the Registers.
Dealing with instructions from your lender
It’s normal for your Lender to instruct us to deal with the preparation of the security documents on their behalf. We will prepare these documents and explain them in detail before asking you to sign. It’s also our responsibility to prepare a report on the title of the property for your Lender.
If you are married or in a civil partnership but the title of the property will be in your name only, then your Lender will need your partner’s consent towards security documentation. Your partner may wish to have some independent legal advice before providing that consent however, consent is not required if you are separated and your partner will not occupy the property with you.
Registering your title
We will take care of the title registration on your behalf. After you’ve paid the price, we’ll submit an LBTT (Land and Building Transaction Tax) form to HMRC and register your title in the Land Register. Once registered, a Land Certificate will be issued and if you have a mortgage, we will send this to your Lender. If you don’t have a mortgage, we’ll safely store the Certificate in our strong room and send you a copy (unless you advise us to send the original copy to you). The registration process can often take several months (even years) before you receive a copy of the certificate, so don’t panic if you haven’t heard from us for a while.
Date of entry
We will pay the purchase price for the property on your behalf on the date of entry that’s specified in the missives. In exchange for the payment we’ll receive:
- the signed Disposition transferring the title of the property into your name
- the keys to your new home
- any other relevant documentation
This should all take place before 3pm on the date of entry however, there may be occasions where there are delays due to loan funds not arriving in our account or due to the sellers own transaction being delayed.
Once you receive the keys it’s important to the check that:
- the Seller has left all items that were agreed and included in the purchase price
- the central heating system is working properly
If you come across any issues then depending on the terms of the missives, you may be able to claim against the seller but, any claim must be made immediately through your solicitor.
Make a will
You’ve secured your new property but now its time to secure the future for your family and loved ones. Making a Will is arguably one of the most important things you can do for yourself and your family. A Will can legally protect your spouse, children as well as your assets.
A Will ensures that if anything happens to you then your money, property and possessions are left to those you specifically request. If you do not have a Will then the law will decide how your estate is divided or passed on and that may not reflect your own wishes.
At Gillespie Macandrew we have one of the leading Private Client teams in the country. We’re committed to advising our clients on every legal and tax aspect and that includes advice on making a Will or amending an existing one. Contact us for more information.
Useful reminders & tips
Land and Building Transaction Tax (LBTT) - This tax is levied on land transactions by the Government and responsibility for paying the LBTT falls on the party acquiring the interest in land. The current rates of tax are as follows:-
Purchase price - LBTT rate
- Up to £145,000 - 0%
- Above £145,000 to £250,000 - 2%
- Above £250,000 to £325,000 - 5%
- Above £325,000 to £750,000 - 10%
- Over £750,000 - 12%
The purchaser must submit a comprehensive tax return to HMRC within 30 days of substantial completion of the transaction. Failure to submit the return on time or the giving of incorrect or incomplete information in the return will result in penalties being incurred. In most cases a return must be submitted even if no tax is payable.
If you’re unsure of your tax position or would like some advice contact us now.
And finally, don't forget to......
- Take final gas and electricity readings before you leave your present property.
- Arrange for re-direction of your mail
- Notify your telephone supply company
- Register with a new Doctor if you are moving district.
- Check which school catchment areas your new home lies in
- Notify family and friends of your new address.
- Cancel insurance arrangements for the old property
- Switch off the water supply if your present property is be left vacant for a period of time after you have left
- Notify the school, your bank and your employers of your change of address/phone numbers.
Many thanks to all at Gillespie Macandrew for the efficient service as well as the regular and thoughtful communication during the weeks leading up to the sale of my mother’s house. It certainly made the process a great deal less stressful than I had anticipated. My brother and I are very grateful to the team.
Lesley Stevenson - Southfield Terrace, Edinburgh