Ask us at Frettens
Here's some frequently asked questions on buying and selling property, if you need to ask us anything more please get in touch using the form on the right.
Q. Can you give me an estimated exchange and completion date?
A. Conveyancing matters tend to take 12 weeks from the receipt of the contract to completion.
Q. Can you do it quicker than that?
A. We can expedite a matter but this entails putting your matter before all of our other matters so we have to charge £350.00 plus VAT for expediting your matter. If there is a chain of transactions however the chain will proceed at the pace of the slowest matter so please consider this before you pay for expedition. Your solicitor may not be the one who is holding matters up!
Q. My seller has asked me for £500.00 cash for some of the furniture at the property. Is this OK?
A. Any fixtures and fittings and furniture being left at the property and bought by you should be put on the sale contract as ‘chattels’. This means that there is a contract to protect you if the furniture / fixtures / fittings are NOT at the property when you complete. Agents will very kindly arrange this sort of transaction but you should always let your solicitor know about this as the agent is not a party to the sale contract so cannot help if things go awry.
Q. I am a first time buyer but my partner is not – can we get first time buyer’s Stamp Duty relief?
A. Unfortunately no, the HMRC treat married couples as a single entity for First Time Buyer’s Stamp Duty relief. However you may be able to take advantage of the Help to Buy ISA bonus. See https://www.helptobuy.gov.uk/help-to-buy-isa/who-is-eligible/ for details.
Q. I am selling my late father’s flat and the lease only has 50 years left on it? My agent says I have to drop the price as most lenders will not lend on a lease that short. What can I do?
A. If your father owned the flat for more than two years you can obtain a statutory lease extension (99 years at a peppercorn rent) from the landlord and assign the benefit of this to your buyer. This will cost you a premium to the landlord and legal fees, however it makes the flat more widely available to buyers with mortgages. We have an excellent leasehold department who can arrange that for you alongside the sale of the flat.
Q. I am buying a buy to let property and I don’t own any other property (although my husband does) – do I still pay higher rate SDLT?
A. If you, or your husband, own more than one property on completion and this property is not your main residence then unfortunately you do have to pay higher rate SDLT. The HMRC treats married couples as a single entity for the purposes of the higher rate SDLT.
Q. Why do I have to pay leasehold fees when I own a share in the Freehold?
A. This is because the property you own is a Leasehold property and work is required to investigate the Leasehold title. Whilst you have a share in the Freehold what you actually own is a share in the Company that owns the Freehold which means you own it together with (usually) all the other Leasehold owners. When you come to sell, your buyer will be buying the Leasehold title from them and the share in the Freehold.
Q. Can I buy with a 5% deposit?
A. Yes - this is more common with first time buyers who need a 95% mortgage and buyers using the government Help to Buy scheme. As a 10% deposit is usually offered we will need to inform your sellers solicitors at the start of the transaction. This does not mean your purchase will not proceed but simply that we need to obtain the sellers agreement to the lower deposit. Deposits on a purchase of a property act the same as deposits on other transactions such as buying a car or a holiday. The deposit secures your purchase on exchange of contracts and as such if you are for any reason unable to complete your purchase then the seller keeps the deposit amount.
Q. When do I have to pay my legal fees?
A. These are usually paid on the day of completion of your purchase / sale and are included in the final full amount required to complete your transaction.
Q. When do I pay the deposit?
A. The deposit is required in order to Exchange contracts. We usually ask for you to ensure we have funds the working day before exchange to ensure matters run smoothly on exchange.
Q. What is Help to Buy?
A. Help To Buy is a government scheme whereby the buyer only needs a 5% deposit (of the full purchase price). The government lends the buyer 20% of the purchase price which is secured on the property (and generally payable back when the property is sold with interest being payable after the first 5 years). The buyer will therefore only need to obtain a mortgage from a high street lender (such as NatWest, Nationwide or Santander) for 75% of the full purchase price which usually means a lower interest and repayment rate. Help to Buy example:
- Property Price: £159,950
- Your 5% deposit: £7,998
- Your 75% mortgage: £119,962
- 20% HTB Equity loan £31,990
- Total purchase price £159,950
Q. Can I use money from my parents for my purchase?
A. Yes! This is one of the most common ways in which people raise funds for a deposit or simply as additional funds towards their purchase. We will need to carry out money laundering checks and confirm the details with your parents as to how the monies are being used i.e. loan, gift or secured legal charge. If you are also obtaining a mortgage for your purchase we will also need to confirm these details to your lender.
Q. What is Stamp Duty?
A. Stamp Duty was originally introduced by the government hundreds of years ago to raise extra funds and whilst the amounts payable have changed drastically over the years, the general function is still the same to this day. In England and Northern Ireland you are liable to pay Stamp Duty when you buy a residential property, or a piece of land, costing more than £125,000 (or more than £40,000 for second homes). This tax applies to both freehold and leasehold properties – whether you are buying outright or with a mortgage. If you are buying a property in Scotland you will pay Land and Buildings Transaction Tax (LBTT) and in Wales you will pay Land Transaction Tax (LTT) instead of Stamp Duty.
Q. How much is Stamp Duty?
A. On a Standard rate transaction:
- Up to £125,000 Zero
- The portion from £125,001 to £250,000 2%
- The portion from £250,001 to £925,000 5%
- The portion from £925,001 to £1.5 million 10%
- Anything above £1.5 million 12%
In certain circumstances there are different rates payable such as first time buyers, second homes and purchases by companies. Please ask us if you require further information.
Q. Do I qualify for first time buyer Stamp Duty?
A. A first-time buyer is someone who has never owned freehold or leasehold interest in a dwelling before and who is purchasing their only or main residence. Previously or currently owning a residential property, or an interest in a residential property, anywhere in the world is counted when determining whether someone is a first-time buyer. Where there are joint purchasers, all purchasers would need to be first-time buyers. A first time buyer cannot claim this tax relief on a buy to let purchase.
Q. What is a water search?
A. The water and drainage search will show if the property is connected to the mains foul sewer, whether surface water drains to the sewer or if it is dealt with by way of a soakaway, if mains water is connected to the property, if there are any agreements with the developers which have not been discharged, in addition to other items which the search contains.
Q. What is a local search?
A. The local search will advise if all the roads and footpaths serving the property are adopted. If there are any outstanding planning notices, if there is a tree preservation order affecting the property, or any outstanding building notices. In addition we will be unable to advise if there are any outstanding financial grants payable to the council. The local search will also confirm whether or not there are any road or other proposals in the area, whether the land is contaminated or in a radon gas affected area, and whether there are any proposals for compulsory purchase etc.
The environmental search will reveal whether the property is built on contaminated land. If it is you could be responsible for cleaning up any contamination to the satisfaction of the local authority. In addition, the search shows if the area is in an area which is liable to subsidence, in an area affected by flooding, whether surface water, river, or tidal flooding, together with other adverse matters which may affect the ground.
Q. What is an indemnity policy for?
A. An indemnity policy is a form of insurance that can be used to cover potential discrepancies with legal issues when selling a property. Indemnity policies can be used for missing legal documents, they can be used for breaches of restrictive covenants (promises that run with the land) and they can be used for a lack of planning and building documents amongst many other things. They are obtained for a one off fee, and can cost anything from £15 up into the hundreds. This depends on the specific policy and we can advise you about this if required.
Q. What is a Deed of Covenant?
A. A Deed of Covenant is a legally binding document that the buyer will sign to say that they agree with the lease terms.
Q. What is a Restrictive Covenant?
A. Restrictive Covenants are binding conditions that are written into a property's deeds or contract by a seller to determine what a homeowner can or cannot do with their house or land under particular circumstances. They ‘run with the land’ which means that even if they were imposed hundreds of years ago they can still in certain circumstances be relevant today.
Q. When do I sign my mortgage?
A. Following receipt of your mortgage offer we will report to you on your mortgage and send to you your mortgage deed for signing and witnessing. We can assist with witnessing your signature if required. Whilst the deed is signed in advance, it is not dated and does not take effect until completion which is the day the purchase price is paid to the seller and the day you formally purchase the property.
Q. When is my first mortgage payment?
A. Most lenders will take their first payment by direct debit on or around 10 days after the formal completion date. This payment will usually include the first months mortgage instalment along with the interest for the period from the completion date up to the date your second mortgage payment is due. Your lender should write to you following completion to confirm full details and we recommend telephoning your lender if you have not received any paperwork from them in the first few days in your new home.
Q. What happens if I change my mind?
A. Prior to formal exchange of contracts you are free to change your mind about your sale or purchase without repercussions to the other parties in the transaction, although you will be liable for third party costs incurred to date such as; surveyors costs, legal fees and mortgage application fees. After formal exchange you will have entered into a legally binding contract and you will be subject to the terms of that contract. We will always advise you fully on the terms of your specific contract and your purchase or sale as a whole prior to exchange so you will be clear as to the terms before you enter into the contract. However, if you change your mind after the exchange of contracts and do not wish to proceed with the sale or purchase, you will be breaching the terms of the contract. Usually in this instance the party which is not at fault will issue a Notice to Complete. The notice provides the other party 10 days’ grace period to complete and they must also pay interest at a daily rate to the other party. The consequences of not completing are usually as follows:
- If the buyer fails to complete the seller is entitled to end the contract and keep the deposit –which is usually 10% of the agreed sale price
- The seller can re-sell the property and any contents included in the contract
- The seller can claim damages
- If the seller fails to complete, the buyer can end the contract and the seller is liable to pay the buyer the daily rate of interest during the Notice to Complete period, along with the original deposit
- The buyer has to return any documents received to the seller at the seller’s expense
- The buyer’s and seller’s remedies are not restricted to losses determined in the contract. There is nothing to stop non-defaulting party suing the other for breach of contract in Court for additional losses or for specific performance of the contract (in other words, applying to the Court to make the defaulting party complete the original sale/purchase)
- If the buyer fails to complete the seller could claim losses incurred due to market depreciation – so if the value of the property has decreased from the date the contract was breached the buyer has to pay the difference
Q. Can I make alterations to my flat?
A. This is subject to the terms in your lease for your property and we can specifically advise you in regards to the same upon receipt of your lease. Any permission required from a landlord or freeholder is in addition to any potential planning permission that may also be required.
Q. Do I need planning permission?
A. If you are in any doubt about whether you need to apply for planning permission you should contact your local area planning office. The Planning (General Development Order) (NI) 1993 sets out the types of development that are given planning permission through 'permitted development' rights. If you want to confirm whether any development that you have already carried out or that you propose to carry out is lawful for planning purposes you may apply for a Certificate of Lawful Use or Development.
In general terms you must apply for planning permission if:
- You want to make additions or extensions to a flat or maisonette (including those converted from houses). (But you do not need planning permission to carry out internal alterations or work which does not affect the external appearance of the building.) This is alongside any required permission from the landlord or freeholder under the terms of any lease.
- You want to divide off part of your house for use as a separate home, for example; a self-contained flat or bed-sit or use a caravan in your garden as a home for someone else. But you do not need planning permission to let one or two of your rooms to lodgers so long as the main use remains that of a private residence.
- You want to build a separate house in your garden.
- You want to divide off part of your home for business or commercial use, for example; a workshop or you want to build a parking place for a commercial vehicle at your home.
- You want to build something which goes against the terms of the original planning permission for your house, for example; your house may have been built with a restriction to stop people putting up fences in front gardens because it is on an "open plan" estate. Most local authorities have a record of all planning permissions in your area and these can generally be accessed online.
- The work you want to do might obstruct the view of road users.
- The work would involve a new or wider access to a trunk or classified road.