What is conveyancing?
The legal process of buying and selling property is called conveyancing and can be carried out by a property solicitor or a licensed conveyancer. The solicitor or licensed conveyancer will check the title of the property to ensure it can be legally sold, draw up the contracts of sale, research and advise whether there are any restrictions on the use of the property, check that there are no planned developments that will adversely affect the property, handle the deposit and final payment for the property and register the new ownership of the property with the Land Registry. Although the process is relatively straightforward, the experience of solicitors in spotting potential problems can be very valuable.
Making an offer
In England and Wales (but not in Scotland), the acceptance of an offer for a property is not legally binding. Both buyer and seller are entitled to renegotiate the price or withdraw their offer until contracts have been exchanged and a deposit (usually 10%-20% of the total value) is paid, which does not happen until the buyer's solicitor has confirmed the property's title, the property has been surveyed and other checks have been completed and the mortgage has been arranged. Completion will usually follow a week or two later.
Is ‘gazumping’ allowed?
In very fast-moving markets, this can lead to 'gazumping' (where a different (usually higher) offer is accepted by the seller before exchange of contracts) – and 'gazundering' (where a buyer reduces their offer shortly before the expected exchange date to force a buyer to accept a lower price). These reasons, and adverse surveys mean that approximately one-third of house sales collapse between an offer being accepted and exchange.
Some people blame estate agents for encouraging gazumping, but as a buyer there is little that can be done about it as an estate agent's only duty is toward the seller. However, estate agents are under a legal obligation to pass on all offers to the seller – requiring prospective buyers to see their in-house financial advisers before passing on offers is strictly unethical – and provide accurate details of a property to buyers.
Many estate agents are members of the National Association of Estate Agents which has a code of practice and increasing numbers are also signing up to newly-created Ombudsman for Estate Agents which can hear disputes and making binding decisions against agents that have joined the scheme.
Not so long ago, most house buyers took out a mortgage when they bought their house and dutifully paid a bit off each month until the capital was paid off. Now, however, the ultra-competitive mortgage market means that it often pays to shop around even when you already have a mortgage and have no intention of moving house. Many homeowners also use remortgaging as a way of cashing in on the equity growth of their flats and houses by increasing the amount that they borrow.
Transferring interest in the title
The legal process of remortgaging is relatively straightforward and simply involves transferring interest in the title of the property from one lender to another. Some lenders even throw in the legal side for free. Otherwise, valuation fees will be in the region of £200-£300 with legal fees of around £250-£300 and there may also be an arrangement fee levied by the new mortgage lender.
Check terms and conditions of the mortgage
However, before remortgaging, you should check your existing mortgage's terms and conditions. Some mortgages, particularly those with discounted, capped or fixed rates of interest, carry redemption penalties which can add up to thousands of pounds, while most will have some form of administration fee to pay if you switch out. You will have to do some very careful sums to see if the benefits of a new mortgage outweigh the costs of leaving your old one.
Buying and selling property abroad
The number of people buying overseas property – whether as a main or holiday home or as an investment – has rocketed in recent years as stressed out Brits look to opt-out of the rat race and soaring UK property values have released significant amounts of equity.
But it is also an endeavour that carries a lot of risk and there has been an equal growth in the number of horror stories coming back from the Spanish Costas and Eastern Europe of misunderstandings and swindles which have turned many people's dreams into nightmares.
Even within the European Union, the laws (and taxes) around buying and selling property are very different from the UK and it pays to do as much research as possible into what the process involves before making an offer. Some of the key factors include what is, and is not, usually included as part of the sale, stamp duty (which can be much higher than the UK), local planning laws and how they govern what nearby landowners and neighbours can do with adjoining land and property. Legal costs can also be higher and there may be other completely unexpected laws affecting your property purchase, such as the requirement in Spain to draw up a will in Spanish when you a buy a property. Always take advice – buying property abroad is not a suitable DIY project.