Guide to Buying a House
At Orlando Reid, we recognise how stressful purchasing a property can be. Despite the apparent “blood, sweat and tears” expent during the buying period, the experience of receiving your keys is truly gratifying!
Below, we have compiled a list of points for consideration when purchasing your property.
How much can I afford?
This should be the first point to consider, even prior to deciding on an area. We would strongly advise using a broker rather than going directly to a bank, even if you have an existing relationship with that bank. A mortgage broker will be able to review a range of options from a variety of lenders to suit your personal situation, and often save you money.
You should try to avoid paying a broker “up-front” as this can be detrimental to the quality of their service to you further down the line. There are excellent brokers who will not request a fee until completion and this is often only a small admin fee.
When should I register with an agent?
Having consulted with a broker regarding your borrowing potential and you have the ability to get an “agreement in principle”, you should register with local agents in the area(s) of interest to you. It is helpful to have an agreement in principle prior to speaking to an agent, as they can immediately start searching for the perfect property for you, informing you immediately when a property that fits your criteria comes to market. They may even call you before a property is advertised on the market, to help avoid competition.
At the point of registration with an agent, it is worth having compiled a list of your essential requirements for the property search and, conversely, a list of requirements that are desirable but you would be willing to sacrifice. We know that most buyers will not find the “perfect property” so having this list is key to keeping your wishes at the centre of our search. It is also a good idea to register with marketing websites such as Rightmove. Sign up to their “alerts” and you will receive real-time notifications when a property of your specification in your chosen area comes to market.
What questions should I ask when viewing a property?
Below are a few essential questions you should ask the agent:
- Is the property leasehold or share of freehold? (see jargon buster at the end)
- If it is leasehold what is the unexpired lease length?
- What are the charges? (ground rent, service charge and buildings insurance)
- Are there any upcoming works scheduled for the building?
- Who is the freeholder?
- Do you know anything about the neighbours?
- Is there a chain?
- Is there a chain?
- Who are the neighbours?
- Have there been any works carried out on the house in the past few years?
When booking a viewing with your agent, find out how much time they have allocated for the viewing. If you don’t you may find that their diaries are booked on a very tight schedule which may only give you 5 to 10 minutes to look around a property. Request more time if you need to.
What do I need to consider when making an offer?
We recommend providing as much detail as possible with your offer, including current financial situation, level of deposit and ideal completion dates, as this will show intent to the agent and vendor. We can help through this process and can provide you with templates within which to propose your offer.
How do I go about choosing a solicitor?
We would advise you to pick a reputable solicitor with positive client feedback. If you are buying in London, it is advisable to use a London-based solicitor. This is particularly the case if you are considering purchasing a leasehold property as they will be more au fait with London leases. Transactions in London also tend to move much faster than elsewhere in the country! It is important to ensure that your solicitor is working a comparable speed to you and the rest of the chain, as dyssynchrony in this regard can compromise the purchase of the property. Any set timescales should be adhered to and worked towards. The conveying process is one of the more arduous tasks in a transaction and often can be a sticking point for a sale to progress. A reputable solicitor is worth investing in, to give you the highest chance of seeing the buying process through to completion.
It is worth liaising with a solicitor and having someone in place as early in the process as possible. This gives you time to provide them with the required (sometimes copious) documentation required, early on in the process. Often if it is left too close to the point where an offer is accepted. Give yourself that buyer’s advantage by having all your paperwork in place at the time the offer is accepted!
What happens once my offer has been accepted?
This is an exciting time! However, the buying process is not yet over.
Below, we have listed what is expected of you as the buyer at this point:
- You will need to inform your solicitor of the offer acceptance
- You will need to provide your solicitor details to your agent. The agent will provide all parties with “Memorandums of sale” documents. The vendor’s solicitor will provide initial papers to your solicitor and the conveyancing process will be underway
- You will need to liaise with your mortgage broker to convert your mortgage in principle to an official mortgage application. We recommend doing this as soon as possible, so that a mortgage survey can be booked in a timely manner, to prevent any pressure from the vendor.
- You will need to appoint an independent surveyor to carry out any additional surveys you require. On a flat, a homebuyers report will suffice. On a house, a full structural survey is advisable.
Once all surveys are back and satisfied, then it is over to the solicitors to carry out their process through to completion. Don’t expect this part of the process to be easy. If you are buying a period property then be prepared to see little points on the survey results and quite often damp. This is due to the age of the property.
- The main advice at this point is to keep pressure on your solicitor so that you are in a position to exchange contracts in the agreed time.
What needs to happen to exchange contracts and achieve completion?
You are now in a position to exchange contracts.
To facilitate this, the below items have to be fulfilled up and down the chain:
- All enquiries have been answered satisfactorily
- The mortgage offer is in with the solicitor
- All searches are back with your solicitor
- Signed contracts and the deposit are back with your solicitor
- A date for completion has to be agreed prior to exchange of contracts
Once contracts have been exchanged, the purchase deal is legally binding and “set in stone.” You must now wait for the completion day. You will get a call from the solicitor to inform you that you are able to collect the keys from the agent. Ensure you leave enough time to celebrate the purchase of your new home!
Jargon Buster, Tips & Tricks:
Gazumping – When a buyer tries to offer more than the amount currently accepted from your chosen buyer. This is generally frowned upon, but all offers must be put forward up until contracts are exchanged.
EPC – Energy performance certificate. This is required by law, before your property can go onto the market. It is valid for 10 years and often there is already one in place if you bought post 2010. You can check on the national database www.epcregister.com
Homebuyers report – This is the report provided to the buyer if they are having an independent survey. It is most commonly undertaken on flats. House buyers will have a more detailed structural survey carried out.
Mortgage offer – Once a satisfactory mortgage survey has been carried out, the bank will send out a document to the buyer to let them know how much they are willing to lend on the property. This needs to be in place before exchange of contracts can take place.
Leasehold – Flats will be often be “leasehold”. This means that you are effectively leasing the land from a separate party, the freeholder. It is your legal right after 2 years of owning the flat to extend the lease. This will come at a cost depending on the length of lease you have left. For more information, the following website offers guidance via their calculator: http://www.lease-advice.org/calculator/
New leases will start at a nominal length, most commonly 99 years or 125 years. Once a lease falls below a “marriage value” at 80 years, it becomes significantly more costly to extend the lease. It is advisable to check these points out before offering on a property. Extending a lease can be a lengthy process and can take months.
Leasehold properties will have a management company responsible for the upkeep of the building an maintenance. Part of the service charge will go towards this. You will also pay a ground rent to the freeholder.
Share of freehold – Flats can also be “share of freehold”. This means that the owners of each flat in a building are sharing and looking after the freehold between them. There will still be an underlying lease. This is much easier to extend and will normally cost a small solicitors fee to carry out. The management of the building may be organised in a variety of ways. Freeholders may set up a company between them and appoint themselves as directors. The co-freeholders may then pay into a joint fund (often called a sinking fund) where they build up a pot of money for any unexpected or planned works. Or, it may be that issues are dealt with on an ad-hoc basis, without such a fund in place. This works well in a building where the majority of the freeholders reside in the building, but less well in buildings where most units are rented out, as it can result in communal areas running into disrepair.
Freeholder – Most houses will be freehold. In this case, the proprietor will be the resident and freeholder. In the case of leasehold flat, the freeholder will be an individual or company.
Service charge – On a leasehold property there will be a service charge paid to the freeholder or management company. This will be paid to cover maintenance of the building and general upkeep. If there is a concierge or lift in the building, these service costs tend to increase. Often these costs will also cover building insurance.
Ground rent – Rent paid to the owner of the land (the freeholder.)
Under offer – A term used by agents to signify that a property has had an offer accepted on it, but contracts have not yet been exchanged.