Buying Property in the UK

Some Facts 

There is no substitute for proper research when buying property in the UK. Your sources of information could be: estate agents, solicitor agents (Scotland), relocation agents, search agencies, newspapers, magazines, periodicals, the internet, property exhibitions and auctions. You can also drive around various neighborhoods and look out for "For Sale" boards and make enquiries independently. Consulting existing property owners is also a good idea. 

Properties in the UK offer a wide choice and buyers can opt for modern townhouses and apartments, dilapidated country mansions, castles and period terraced, semi-detached and detached houses. Buying land and constructing your own house is another alternative. As a buyer it would make sense for you to list out the features that you are seeking in your new home. This will make it easier for you to zero in on suitable properties.   

Dealing with Estate Agents 

Estate agents usually facilitate property sales in the UK while solicitor agents carry out the same in Scotland. A number of rip offs and scams exist and you would do well to research the background of an estate agent before opting to deal with him. To look for an agent selling property in a particular area consult the Yellow Pages, local newspapers or the internet. Estate agents in the UK publish free newspapers and magazines listing various old and new properties for sale. 

Costs Likely to be Incurred 

Buying a home in the UK attracts a fee of 3-5% for a property that costs less than £250,000. A first time buyer will have to shell out a fee of around £6,000 including conveyancing and other solicitor's fees, stamp duty, survey fee and removals. As a thumb rule most fees are a percentage of the cost of a property due to which the more expensive a property, the higher will be the fees payable. 

The various costs likely to be incurred by property buyers over and above the property price are:

- Stamp Duty & Land Tax is payable if the property costs over £60,000.

- Solicitor's or Licensed Conveyancer's Fees: There's no fixed charge, but it is usually around 0.5 to 1% of the purchase price (plus VAT).

- Valuation: The valuation for a £100,000 property costs from around £175 (plus VAT) (Many lenders now waive this fee)

- Survey Fees: A report on the general condition of the property and valuation costs anything from around £250 (plus VAT) for a £100,000 property. A full structural survey is much more detailed in nature and costs around £350 for a £100,000 property, depending on the inclusions in the report, the surveyor and the property. 

- Land Registry Fee depending on the value of the property and whether the property is registered or not.

- Annual running costs usually average around 2 to 3 per cent of the cost of a property.

- Mortgage Indemnity Guarantee 

Contracts

In England, Wales or North Ireland, there are no preliminary contracts and prospective buyers make an offer on a property subject to survey and a contract. In Scotland however, things are done differently. The buyer or seller can withdraw from a sale any time before the exchange of contracts. A purchase becomes legal only after the exchange of contracts wherein a contract with the buyer's signature is sent to the vendor's solicitor and simultaneously the contract with the vendor's signature is sent to the buyer's solicitor. A 10% deposit (negotiable) also becomes payable.  

Completion (or closing) which is the final act of buying a property when the balance of the price is paid and the title deeds are handed over is done four weeks after the exchange of contracts. 

Following completion you need to look in to these matters:

- Stamping the conveyance and paying the stamp duty on the property purchase to the Inland Revenue.

- Registration of the transfer of ownership with the Land Registry if the land was previously unregistered.

- Notifying your lender and life insurance Company about the completion of the sale.

- Sending the title deeds to your mortgage lender to be held as security until the loan is paid off or the property is sold.

- Notifying the leaseholder of the sale in case the property is a leasehold apartment.

Mortgages

In the UK young people with good income prospects are eligible for special guarantee and professional mortgages that lend up to five times their annual salary.  

Graduates and young professionals are also eligible for the Graduate Network scheme which is backed by the Britannia Building society; more information on the same is available at www.sharetobuy.com.

You could alternatively pool in resources and jointly buy a home with relatives and friends. Co-buyers need not have equal shares and their shares can be proportionate to the deposit paid and the repayments made. The percentage ownership of each co-buyer should be registered on the title deed. All co-buyers will be registered as ‘tenants in common' rather than ‘joint tenants'. A ‘declaration of trust' also becomes necessary so that if one person wants to sell, the others have the option of buying them out - otherwise the property in question will have to be sold.

Photo: Natesh Ramasamy