Overview of buying and selling a property

Buying or selling a property is, for many, a major life event. It can be a complicated process, but there will be plenty of professional help on hand to guide you through the various stages.

In England and Wales, a property can be freehold, leasehold or commonhold.

Freehold means there is no ground rent or service charge as the land the property is built on is included in the sale.

Leasehold means you will have to pay a ground rent and possibly also a service charge to the freeholder. It is sometimes possible to buy the freehold at a later date. It is important to check the length of time remaining on the lease. If not much time is left then it may be difficult to obtain a mortgage.

Commonhold means you can buy the freehold and own common parts of the building jointly with the owners of other flats in the building. There is no ground rent and service payable. However, you may have to contribute towards general maintenance and insurance for the common parts of the building.

Selling a property

Using an estate agent is the easiest way to sell a property. They will guide you through the stages of marketing your property, and will show prospective buyers around.

Alternatively, you can sell your property yourself. You must decide on an appropriate price (you may want to make it slightly higher as the buyer is likely to make a lower offer).

When deciding whether to accept an offer, you should consider whether there is a property chain involved, and how quickly the buyer can arrange their mortgage.

You will have to have a Hip ready before you put your property on the market.

You will then have to instruct a solicitor or licensed conveyancer to carry out the legal transaction involved in transferring ownership, unless you decide to tackle this complex legal task yourself.

HIPs

Home Information Packs (HIPs) are a collection of documents setting out information about a property. They must be provided by the seller, and are legally required before a property can be put on the market.

HIPs should not contain any advertising material, and are intended as a guide to the buyer. They must, for example, include an energy performance certificate which describes the energy efficiency of the property, and evidence of title. They include local searches, although you may be advised to have your own solicitor carry out these searches during conveyancing for your own piece of mind.

You will have to use a HIPs provider for this. Some solicitors’ firms offer this service.

Buying a property—what are the stages?

Once you have decided on a property, you can make an offer on it, which the vendor can accept or reject. There is no limit to the number of offers you can make, so if your first offer is not accepted you can offer more. You can make an offer subject to survey. Offers are not legally binding.

It is usually a good idea to have a mortgage agreement in principle, which a mortgage broker or bank can help you with, before you start looking. This helps speed up the purchase process, and also helps you decide what you can afford. The lender will want to survey the property. You may also want to have the property surveyed to check for faults.

The next stage is conveyancing—the legal process by which ownership of the property is transferred. This starts after an offer has been accepted, and solicitor’s details have been exchanged between buyer and vendor.

It is not necessary to hire a solicitor or licensed conveyancer to do the conveyancing, but it is advisable. Conveyancing is a relatively cheap process, and using a professional protects you against potential financial disasters further down the road. Many mortgage lenders will insist on the conveyancing being carried out by a solicitor in order to protect their investment. What if, for example, the seller was not legally entitled to sell the home, or there is a boundary dispute brewing against the property, or there is an ancient right of way through the garden? The potential hazards are too numerous to list.

The conveyancing process involves: examining the title deeds for potential problems; doing local searches for planning conditions or other conditions of ownership; checking the street, pavement and drains are maintained by the local authority; negotiating the draft of the contract setting out the terms of sale; arranging for the stamp duty to be paid; and registering or recording the change of title to the property, and the mortgage deed, with the Land Registry.

The solicitor will also help co-ordinate the sale if there is a property chain. This is where one purchase depends on the sale of another property further along the chain. This can often delay a purchase, or even cause a sale to fall through.

Once this is done, you can move to completion (exchange of contracts) and collect your keys.

Gazumping and gazundering

These are nasty tricks carried out by the seller or buyer (respectively).

Gazumping is where the seller has accepted a buyer’s offer but then takes a higher one. This can be avoided by asking the seller to take the property off the market and getting their agreement to do this in writing. You may be asked to pay a deposit.

Gazundering is where the buyer waits until contracts are about to be exchanged, and then tries to force the seller to accept a lower offer.

Scotland

Property sales follow different rules in Scotland.

Vendors and buyers are known as sellers and purchasers north of the border.

Property is advertised as ‘fixed price’ or ‘offers over’.

Offers are made in writing. If the offer is accepted, the seller’s solicitor will issue a qualified acceptance. The purchaser’s solicitor then has a fixed period of time in which to check the necessary deeds and paperwork. There is no legally binding contract and both parties are free to walk away.

The seller’s solicitor will then issue a formal acceptance of the offer. Both parties are then legally bound into the contract. There is no danger of gazumping or gazundering.

The conveyancing will then be concluded, funds cleared and documents sent.

Property sales usually take less time to complete in Scotland than they do in England and Wales.

HIPs in Scotland are known as ‘The Home Report’, and contain different information.  

Northern Ireland

Northern Ireland uses ‘energy performance certificates’ instead of HIPs.

Properties are usually sold by ‘private treaty’, the price being negotiated between the buyer and the seller’s estate agent. Solicitors then turn these arrangements into legal contracts, and carry out the conveyancing.

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