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Property for sale UK |
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Buying Property in England and Wales
Buying a property in England and Wales is the goal of many investors and second home buyers around the world. The buying process is essentially straightforward with the same procedures in place for both national buyers and foreign investors.
All British estate agents are licensed and have taken legitimate exams in order to become professionals in the real estate market place. It is essential to work with an experienced estate agent in England and Wales as it is anywhere in the world. The estate agent acts not only on your behalf, but on behalf of the vendor and in some cases for both parties. Estate agents will charge their commissions to the vendor, so the price that is advertised is the price you pay.
Estate agents in England & Wales typically work with 'Exclusive Listings' which they will advertise to the general public with many of these properties are now shared on MLS systems throughout the UK.
Most estate agents in England and Wales work within a relatively small area in relation to their office and you may find that it is necessary to speak to several different offices in order to find a property that meets your requirements.
Buy to Let Properties
Buy to Let properties have been an extremely lucrative way of investing in property for many years now. But buyer beware, there have been many investors who have failed to profit from rental properties. Successful investors tend to invest in an area that they know; they have ways and means of doing their own due diligence and often have a network of contacts that will give truthful answers to important questions as against the answers that they may wish to hear.
Successful Buy to Let investors utilise local knowledge to their advantage when it comes to acquiring a property at the right price and pricing it correctly on the local rental market. They will target a specific corner of the market and cater directly to them so that they can achieve the highest possible occupancy year on year.
There are a number of 'specialist' companies that market off plan properties with guaranteed rental plans which could/ will cover your monthly outgoings for the first two years. This is great in a rising market but what happens when the rental guarantee expires and the property market has gone soft?
You should always try and research the long term prospects of each and every Buy to Let property so that you have an exit strategy in place should things go wrong - inevitably they will at some point in an investors career. One of the main problems with Buy to Let properties is that they are reliant on the monthly rental to cover the costs. When investors take out 100% mortgages, this can happen with just a couple of interest rate rises. It is far wiser to pay 20% down with cash funds where possible because it will give you a huge advantage in the future should the rental market begin to slide as you will have the ability to drop you rental price if necessary and undercut investors who have higher monthly outgoings.
Currently with first time buyers struggling to get onto the property ladder, strategically placed Buy to Let properties are seeing a surge in business.
Commonhold, Freehold or Leasehold property in England and Wales
There are essentially three types of property in England and Wales and it is crucial that buyers are aware of the differences
Commonhold Property
The term Commonhold means that for example a flat with a freehold title will also have common areas of the building, the land or both which you will share with other owners - this is often referred to as a Commonhold association. There are no service charges or ground rents as the areas are wholly owned by the 'Common Group' of owners. You will have to pay for any expenditure incurred such as maintenance costs, insurance, administration and the Commonhold Association's expenditure. These costs are split between the owners of the property
Freehold Property
Freehold properties are the most sought after as the land on which the property is constructed is part and parcel of the whole property and there will be NO service charges or ground rents to pay. Outside of major cities, freehold titles are the most prevalent form of property.
Leasehold Property
A leasehold property is a 'building' that is wholly owned by the home owner but it does NOT include the land on which the property stands. The land will be owned by the freeholder, to whom you will have to pay ground rent and sometimes service charges to on an annual basis.
The length of the lease reduces as years go by and you will need to ensure that your lending bank will accept the lease based on the amount of years left to run. Leases can vary a great deal depending on the type of property and its location. Some leases are renewable and some are not so we recommend that you seek legal advice prior to entering into any negotiations regarding leasehold purchases.
A monthly or annual service charge is typically charged to leasehold home owners by the freeholder. This service charge will cover, general cleaning, gardening, maintenance and repairs of the building and its land.
A group of leaseholders who live in the same building can make a mutual agreement and se their right to jointly purchase the building and or take over the management.
You can get further information and advice about leaseholds in England and Wales from:-
The Leasehold Advisory Service
31 Worship Street
London
EC2A 2DX
Tel: 020 7374 5380 Or 0845 345 1993 (9.30am to 3.30pm Monday to Friday)
E-mail: info@lease-advice.org.uk
Website: http://www.lease-advice.org.uk/
Prior to entering the property market arena it is often wise to speak to your bank and establish how much you can actually afford. This will channel your focus as to what you van buy, where you can afford and also take into consideration the buying costs, and subsidiary expenses of not only making the purchase but also the costs of maintaining it after you move in. Some building societies can provide you with a 'pre-qualification certificate' that states the amount that they are willing to lend you subject to the property being approved by them. When it comes to negotiating a price you may be able to use this document to show the vendor that not only are you serious buyers but also that you are in a position to move quickly.
When buying a resale property it is not always necessary for you to pay a deposit, especially if you are taking out a 100% mortgage on the property. You will pay slightly higher interest payments to the lenders, but they are taking the entire financial risk in these situations. If you can pay a 10% deposit, this will typically ensure that you will not have to pay a Mortgage Indemnity fee. Typical lengths of time to complete on a resale property are close to three months.
Deciding on the right property
When viewing properties for sale in England and Wales you will be able to get some comprehensive information regarding properties from estate agents in the form of HIP - Home information Packs/ These HIP documents will include information regarding the property's, its dimensions, its energy performance, its build qualities if a newer property and local authority searches.
Making Offers
When you have found a property, you will need to make an offer. This is normally put forward via the estate agent who will try and negotiate with the vendor and with the purchaser regarding counter offers. It is very normal to make offers in England and Wales especially when the market it is slow.
With so many home owners buying and selling properties in England and Wales I order to place children in better schools, for relocation reasons and for proximity to work there is often at least one 'Chain' in place either on your side or on the side of the vendor.
If you are in a position to move immediately, make it known to the vendor as it is quite possible that the vendor is also waiting to complete on his next property and he/she may favour your offer more seriously. Verbal offers are NOT legally binding, but written one are and they will be included in the sales agreement.
Off plan developments in the UK are obviously free of chains from the vendors' side and this unfortunately can remove the option to make offers unless you are buying several units. However when buying a new property the prices are often reduced especially if you are buying a property that is just starting the construction process - i.e. buying off plan.
When buying an off plan property in England or Wales, you will normally be obliged to pay a reservation deposit of £1,000 and 3%-3.5% a month later for the deposit, minus the initial reservation fee. A further one or two stage payments of similar amounts - 3-3.5% - will frequently be required as construction proceeds, with the final payment paid upon completion.
If you are buying a resale property you will need to arrange a survey. Please note that a bank valuation is NOT a survey. We recommend that all prospective buyers employ an independent surveyor to examine the property, the structure and its grounds.
Surveys
A full structural survey is advisable for older properties where time will have taken its toll on the property. The survey should include as much as is possible with regard to the condition of the property, dangerous substances that may have been used in construction, subsidence, damp of kinds and a multitude of other items.
An intermediate report gives only an impartial account of the condition of the property and is mostly used for newer houses and flats and it is considerably cheaper.
Once you have received the surveyors report and carefully inspected the comments you will then have to decide whether you wish to continue with the purchase, renegotiate the price and terms of sale or even pull out altogether. The report will often give estimates to have repair work completed.
Surveyors will give impartial comment on a property and a good local surveyor may know a great deal about the locality and any immediate conditions that need to be mentioned that could be overlooked. This service does not come cheap, however it is far more sensible than buying a property without having had a survey only to find that it is due to collapse in a year or so.
For more information regarding surveyors follow this link www.rics.org/Property/ResidentialProperty
You should at this time contact your bank so that they are aware of the fact that you have found a property to purchase. The bank will then start to arrange the agreed on mortgage so that all of their paperwork is completed in time for completion of the property. For this to be done, the financial institution that is to give you the mortgage will want to make a valuation of the property for which you will be charged - it is possible that you have the banks surveyor also to do s private structural survey at this time and it may save you some money.
If you require more than 80-90% of mortgage, you may be asked to take out a Mortgage Indemnity Guarantee, which is an extra insurance policy to cover the outstanding percentage of the loan. This will be added to your monthly mortgage repayments and is known as a higher lending charge.
Solicitors
Once you have started the ball rolling, your solicitors will need to perform due diligence on the property. This will include searches with local authorities in regard to new roads, housing, shops. Also as to whether there are any preservation orders and relevant information about conservation areas. A standard set of questions will be sent to the vendor regarding boundaries, fixtures and fittings, neighbourhood disputes plus any other questions that may be applicable to the sale. Finally the land registry will be contacted to ensure that all of the relevant paperwork is in order
Conveyancing - the transfer of property
Most solicitors offer a conveyancing service and most are extremely efficient especially if you already retain their services. Alternatively you can employ a licensed conveyancer. These are NOT solicitors but members of the Council of Licensed Conveyancers
The Council of Licensed Conveyancers
16 Glebe Road
Chelmsford
Essex CM1 1QG
Tel: 01245 349599
As with any service we recommend that you ask for several quotes for the conveyancing fees and find out if they are fixed fees or whether they will be dependant on the work involved.
You should try and ensure that these fee quotations include all stamp duties, land registrations costs, search fees, expenses and VAT - ask for them to be itemized. Also ask how much their fees will be should the sale fall through
The Exchange of Contracts
The Exchange of Contracts is the final contract between you and the vendor. This is prepared when your lawyer or conveyancer are completely satisfied with their enquiries, the surveyors report has been received and acted upon if necessary, the formal mortgage offer has been received, arrangements for the 10% deposit have been made and the date of completion has finally been agreed.
Both the purchaser and the vendor must sign the final draft and then exchange them, at which point both parties become legally bound and the sale must go ahead. Should the purchaser back out at this point they will lose the deposit payment. Once the exchange has been completed, the purchaser should make arrangements for the utilities to be changed over and ensure that the vendor has arranged final meter readings
Completion
Completion will typically take place some 4 weeks after the exchange of contracts. At this point the financial institution will release the purchase funds, the deeds will be handed to your solicitor or conveyancer and the vendor must vacate the property hand over the keys.
Additional costs to property purchase:
Stamp Duties and Land Tax which is usually charged at 1% minimum
Land Registry Fees
Survey Fees
Valuation Fees
Local Authority searches
Mortgage arrangement Fees
Solicitors or Conveyancers fees
VAT
Removal Expenses
For more information about Stamp Duty Land Tax, go to the HM Revenue and Customs (HMRC) website at http://www.hmrc.gov.uk/so/
Running expenses of the property
These may include:-
