Following my first seat with the Litigation, Commercial and Personal Injury Department, I moved to the hectic Property Department in January 2019. I have found this area incredibly interesting, particularly Commercial Property, and important to my continual...
The residential property department deals with all types of property transactions, generally known as conveyancing, including buying or selling, multi-property chain transactions and re-mortgaging. We have specialism in lease extensions and leasehold enfranchisement. Our clients include first time buyers, existing homeowners, developers and property investors.
We recognise that not everyone fully understands the processes involved so have prepared this list of FAQs for your assistance:
What is the difference between a freehold and a leasehold property?
Freehold means that you fully own the property, usually a house, and the land on which it stands along with any external space up to the agreed boundaries. On estate locations, there is often an obligation to contribute to items, such as roads or landscaped areas, that are shared with others.
A leasehold property is usually a flat or maisonette and you own it for as long as is specified in the Lease. You are granted the right to live there by the freeholder in return for an annual ground rent (usually a modest amount. The Lease defines the extent of the property and specifies the rights and obligations of both you and the freeholder and any rules and regulations applying to the building. The Lease also sets out who is responsible for insuring, repairing and decorating different parts of the building and how such expenses are to be shared between the leaseholders and when such payments (often known as service charges) are due.
What does a purchase involve?
A purchase will involve us writing to the seller’s solicitors to request a draft contract package. We will then raise enquiries and undertake title investigations. We will also request searches which include local authority, drainage and environmental searches. Once all this information has been collated we will then provide you with a report on the title and it is usually at this stage that we also provide you with the contract for your signature. Once you have signed the contract, you will then be in a position to proceed to an exchange of contracts, subject to all other parties in the chain also being ready. If you are buying with the benefit of a mortgage, we will also, in almost all cases, act on behalf of your Lender. Once the purchase has completed, we will deal with the Stamp Duty Land Tax requirements and we will also register your title to the property at the Land Registry.
What does a sale involve?
We will prepare a contract package for your buyer’s solicitors. They will review this and raise enquiries. We will respond to the enquiries, liaising with you at the same time. We will arrange for you to sign the contract and , you will then be in a position to proceed to an exchange of contracts, subject to all other parties in the chain also being ready. We will deal with the exchange of contracts and all the completion requirements, which will include redeeming your mortgage and settling the Estate Agents’ invoice.
I have agreed a price. What do I need to do now?
Once you have agreed to sell or buy a property, we are normally notified by the Estate Agents and will then send you our information package, which will guide you through the conveyancing process in greater detail. You will need to provide us with confirmation of your identity, together with details of your mortgage, if applicable.
If you are purchasing, you should arrange a survey and we can provide you with guidance on this. We would also recommend you complete some rough calculations at this stage to ensure you have sufficient funds available for the purchase and all associated costs.
How long does it take to sell my home?
It is difficult to provide an absolute time frame, as it will depend on a number of factors which will vary with each transaction. However, we generally say that a freehold purchase or sale transaction will take between 6 to 8 weeks to complete. A leasehold transaction usually takes a 2 or 3 weeks longer.
What does exchange of contracts mean?
This is the day on which the contracts for the sale and/or purchase are “exchanged” between solicitors. Traditionally, this meant that the parties all met up and each solicitor would hand over the part of the contract signed by their client to the other solicitor, a literal exchange of contracts. Nowadays, the exchange takes place by telephone and you do not need to be present. All parties become legally bound to proceed with the transaction and it is also at this point that you fix the agreed completion date, which is generally 1 to 2 weeks following the exchange. On exchange of contracts you will pay a deposit (see below).
We will not exchange contracts without first confirming your instructions to do so.
What is the deposit and when do I need to pay it?
The deposit is paid on exchange of contracts and normally represents 10% of the purchase price. It can be less if the buyer is getting a mortgage of more than 90% of the purchase price. If you are a first time buyer and will not have 10% available, you need to tell us this as soon as possible. Alternatively, if you have a sale linked to your purchase, we will use the deposit from your sale for your purchase, although you may be required to top this up to ensure it is still 10%. We will require cleared funds for the deposit but we will confirm the position with you when you are ready to sign your contract.
What is the difference between exchange and completion?
Exchange is the date on which all parties become legally bound to proceed with the transaction and the completion date is fixed. Completion is the moving date and when the funds are transferred between the parties.
If you are buying a new build property from developers, it may not be structurally complete on exchange, so the completion date will be “on notice”. This means that, once the build is complete, you will be given approximately 10 working days’ notice of the moving date, which then allows you time to finalise your purchase monies and for us to request your mortgage advance.
What do we need to do after exchange of contracts?
Once contracts have been exchanged, you will need to make sure the building insurance for the new property is placed on risk. You will be responsible for the property even though the sellers may remain in occupation until completion. It is also at this stage that you can firmly book your removals. You will also need to organise the balance of your finances and will need to make sure we are in receipt of cleared funds the day before the moving date. We will provide you with a financial statement confirming the amount of the balance monies required promptly following exchange of contracts. You will also need to contact your service providers (local council and utility companies) and notify all relevant parties of your change of address.
What happens on completion?
On a sale, we will settle the Estate Agents’ invoice and redeem any existing mortgage before sending you the balance. We will also liaise with the Estate Agents to release the keys to your property once the purchase money has been received.
On a purchase, we will transfer the purchase monies to the seller’s solicitors. Once received by them, we will call you to confirm completion has taken place and to notify you that you can collect the keys to your new property from the Estate Agents.
When can I collect the keys?
It is difficult to say at exactly what time your purchase will complete. This is because we are dependent on the banking system and the speed with which other parties involved in the chain can transfer their funds. However once we have heard from the seller’s solicitors that your purchase monies have been received and the estate agents have been instructed to release the keys, we will call you. Generally this is around lunchtime although, if there is a long chain, it can be quite late in the day and your removal company may charge you extra as a result.
When do I need to pay your fees?
We ask for a small payment on account of costs and disbursements at the outset. You will need to pay the balance of our fees on completion of your transaction and this will be shown on our financial statement
What is Stamp Duty Land Tax (SDLT)?
SDLT is a tax payable on the majority of land transactions, notably purchases and new leases. Different tax bands exist so the more the property is worth, the more SDLT you will pay. Higher rates are payable for second properties and discounts and reliefs apply in other circumstances, notably for most first time buyers. In most cases, calculating the relevant SDLT is straight-forward but if your situation is not simple, we can arrange for you to receive specialist advice to ensure the tax is paid correctly.
Who pays the Stamp Duty Land Tax (SDLT) and when?
The buyer is responsible for the SDLT which is due on completion. We will advise you of the amount of SDLT when we ask you for the balance monies required to complete the purchase. We will deal with the actual payment of the SDLT to H M Revenue and Customs after completion.
What is a Chancel Liability search?
Chancel repair liability affects properties located within the parish of a Medieval Church. There have been some recent court cases where people living on what was previously Church land were forced to pay many thousands of pounds for the upkeep of the chancel of their parish Church. It is rarely possible to tell whether a property is affected by the liability to contribute to chancel repair unless a detailed search of historical data is carried out in the National Archive and even then the results can be inconclusive. The cost of such as search is not significant but it is more effective for a buyer to simply purchase an insurance policy against any potential risk and we will advise you on this before exchange.
How do I extend my lease?
We would recommend that you obtain some advice from a surveyor on the question of value first as this will help you budget accordingly. Be aware that you will very likely be responsible for the Landlord’s fees as well as your own.
If you can then negotiate terms for an extension directly with the Landlord, such as the premium, new lease length, new ground rent etc, we can then help you document the changes and register the extended lease at the Land Registry.
If the Landlord is not co-operative, it may be possible to force an extension through by reference to Government legislation. This is a more involved process requiring formal notices to be served but once the procedure has been concluded, the terms will be documented and registered in the same way.
What is Leasehold Enfranchisement?
In certain cases, Government legislation allows the owners of leasehold properties to force the owner of the building to sell the freehold to them. This will be at market value and you will have to cover the Landlord’s fees.
Unless the Landlord is agreeable, it can be an difficult process involving formal notices and procedures. If pursued correctly however, you should end up owning a share of the freehold, alongside your fellow flat-owners, and this may act to enhance the value of your property overall.
What is the Right to Manage?
As an alternative to Enfranchisement (see above), Government legislation gives the owners of leasehold properties the right to take over the management of their building. No premium is payable to the Landlord. A formal process must be followed and the Landlord will still be party to the decision making process, but only as one voice amongst many, rather than as the dominant party.
What is the Right of First Refusal?
If a Landlord wants to sell the building containing leasehold properties, they normally have to offer it to the flat-owners first. This must be on the same terms as they were planning to sell it elsewhere and time is given for the flat-owners to get the money together. The Landlord can withdraw at any time and the sale cannot be forced, unlike Enfranchisement (see above). If you believe that your building changed hands without you being offered this right of first refusal, please discuss your concerns with us as there may be further action you can take.