A Guide to Buying a Property in England

A guide to the legal process for buying a property in England

The process for buying a property in England is well established and long winded when compared to other European systems, but if followed correctly it is an extremely safe system.

Finding a Property

The vast majority of Property for sale in England is marketed through an exclusive arrangement with a local Estate Agent, unlike many other countries there is no multi listing system or equivalent in operation for property for sale in England which means it can be difficult and time consuming when searching for properties for sale. That said many of these smaller agents advertise properties on internet advertising portals, these however typically hold 100’s of thousands of properties for sale and unless you know which very specific area you are looking for browsing for property using advertising portals requires patience.

English Estate Agents are not licensed, which means anyone can open an Estate Agency and commence trading, there are trade bodies and various guilds which may give the buyer some comfort, but be aware that there is no bond scheme operating to protect buyers from rouge agents. In England, Estate agents are regulated by Common Laws covering such things as misrepresentations of information e.g. the accuracy of property details etc. and are required by Law to conform to UK Money Laundering legislation. 

Again, pretty much unique to England, the seller pays the Estate Agents Fees and not you as the buyer, if an Agent does suggest there is a Fee for you as the buyer to pay, then be to investigate the reason for this thoroughly.

When you have seen a property for sale in England, the Estate Agent will arrange with the owner a suitable time for you to view the property, it is reasonable if you not familiar with area to ask them to escort you, some English Estate Agents are happy to do this and others not so, it’s a good idea to establish how they organise viewings for buyers outside the UK before looking to seriously at the properties they are marketing.

Useful Links

The National Association of Estate Agents

The Guild of Professional Estate Agents

Making an Offer

It is usual, even expected that the buyer will make an offer below the advertised price, indeed so widespread is the practice that many properties are advertised with an inflated price to compensate for the practice. The Estate Agent will advise you on the sellers expectations but since they are being paid on percentage basis by the seller there is a vested interest to get the highest price possible. The best approach is to check the price against similar properties for sale in the area, and make an offer accordingly. Most sellers may expect to settle at around 5% less than the advertised price in a “normal” market, in a buyers market maybe as much as 10% less.

The offer is made by you to the Estate Agent who will then act as the intermediary between you and the seller, their code of conduct requires that they put all offers in writing to the seller.

Once the price has been agreed, the property is usually removed from the market and the advertising and sale boards will be changed to state, “Sale Agreed” or “Sold Subject to Contract”. The English system does not require the buyer to pay any form of “Reservation fee” or “Holding deposit” If you are asked to do so you should seek independent legal advice before agreeing to make any such payment.

The Estate Agent will gather information from you regarding the Lawyers you intend to use, if you have no personal preference you can reasonably trust the Estate Agent to recommend a choice of perhaps 3 Lawyers to you.

Useful Links

The Law Society

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The Conveyance Process

At the heart of the English system for transferring ownership of property are the “Title Deeds”. These are set of documents which not only record the current owner and any “charges” over the property, typically mortgages and secured loans, but any covenants that effect the property.

These covenants can be extensive and will cover much detail relating matters for example, such as rights of way, restrictions on use, the boundaries and who is responsible for there maintenance. On older properties which have not changed hands often the “Due Diligence” your Lawyer will need to do can be extensive and time consuming, but such is the nature of English Law and in particular the costs that can be incurred in resolving disputes, it is well worth the patience that may be needed surrounding any potential for dispute in these covenants that they could lead you to. (Pay special attention for the potential for boundary disputes)

You Lawyer will also undertake “searches” with the Local Government Authorities to establish if any past or planned “planning applications” will affect the property you are buying.

It may also be recommended that you engage a qualified and Chartered Surveyor to report to you on condition and value of the property. If the property requires repairs then your Lawyer will either seek these to be done or get the price adjusted to compensate. The Royal Institute of Chartered Surveyors web site

Your Lawyer will draw up the contract of purchase, likewise the sellers Lawyer will draw up a contract of sale, these are usually fairly standard documents and contain clauses which are widely understood and established. Your Lawyer will spend time and talk you thought the contracts.

Once satisfied the next stage in the Conveyance process is referred to as “Exchange of Contracts”

Exchange of Contracts

As the description suggests this is the point when you and seller enter into a formal and legally binding contract. The penalties for breaking this contract arrangement can be severe and will be rigidly enforced. Do not proceed with this stage of the legal process unless you are absolutely sure you have the funds to complete the purchase. The contract will typically require completion e.g. payment in full, including fees and taxes etc. to be made within a maximum of 4 weeks of the date of the exchange of contracts.

You may be asked to pay a deposit (in region of 5 – 15%) at this stage depending on the funding arrangements made for the purchase. If a deposit is paid it is held in your Lawyers escrow account (client account) until the day of Completion.

Completion

Completion is deemed taken place when the seller lawyer confirms that they have received and cleared the funds required in the contact. It is usual that the Estate Agent will have the keys to the property and will release them to you only once they have authority from the sellers Lawyers.

The cost of buying and owning a property in England

Taxation

The UK Government levy a Stamp Duty, payable by the purchaser according to the following purchase price bands

£0 - £175,000 = 0%

£!75,001 – £250,000 = 1%

£250,001 – £500,000 =3%

£500,001 and above = 4%

The UK Government Stamp Duty web site

Local Government will levy a property ownership tax (Known as Council Tax) These will vary according the rateable value of the property and the charge made by the local authority. Your lawyer or the Estate Agent can tell you what these charges will be for your property, for guidance and budgeting only we suggest you allow for the following charges

Small properties, flats, 1 or 2 bedrooms = approximately £800 per annum

Average Family homes, apartments 2 or 4 bedrooms approximately £1500 per annum

Large family homes, 4 plus bedrooms approximately £2500 per annum

The UK Goverment web site for further information about Council Tax

Legal Fees

You should budget around 1% of the purchase price to cover legal fees

Financing the purchase of a property in England

Mortgages are widely available at very competitive interest rates. Typically a lender will be prepared to lend up to 85% of an independant valuation of the property. All UK mortgages are lent subject to status, which means you will be required to prove your ability to repay the loan. You will be required to open a UK bank account and this will require proof of your identity the evidence of which may vary according to your country of origin, as a minimum a valid passport is required.

The Council of Mortgage Lenders

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