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Buying a home
When you buy your new home, ensure you use reputable registered estate agents & associated companies: this will aid in the smooth running of the transaction. Image Finance Ltd has developed this guide to help you understand the buying process. You’ll find plenty of practical tips and sound advice.
Choosing your property
Viewing a property
Types of ownership
New properties
Older buildings
Agreeing the sale
Financing your property
Instructing your solicitor or conveyancer
Time Scales
Exchange of contracts
Stamp Duty
Completion
Home Information Packs
Buying / Moving costs checklist
Decide on the kind of property and location you want, such as semi-detached, terraced, or flat. You should look around several properties and get a feel for the market before you buy. Then ask yourself a few questions each time you view somewhere:
It's probably a good idea to look round several properties and get a feel for the market before you buy.
First impressions count for a lot – but you should view a property at least twice, preferably at different times of the day, to give you a better idea of what’s on offer.
Location is a big priority, so check the surrounding area and local amenities. Here are a few things to think about to make sure it meets your requirements:
On the inside, check to see whether:
There are four types of ownership or ‘tenure’ for property:
1. Freehold: If you buy a property freehold, it means you have full ownership of the property until you decide to sell it.
Freehold properties are usually houses with gardens.
2. Leasehold
If you buy a leasehold property, it means you have part ownership and the right to live there for a fixed time only – usually either 99 or 125 years (999 years or longer in Northern Ireland).
Leasehold properties are generally flats and maisonettes. A landlord owns the freehold of the building, but doesn’t have access to your flat unless invited.
The value of a lease decreases with time, but you can usually extend your lease or buy a new one.
Many building societies and banks may have restrictions on granting mortgages where leases are below 70 years. Image Finance Ltd can give you more information about this.
You’ll also probably have to pay ground rent on leasehold property, and if it’s a flat or maisonette, you may have to pay a service charge to cover repairs and cleaning of shared areas.
Before you buy, a leasehold property, get your solicitor to check:
3. Commonhold
Leaseholders have the right to convert from leasehold to commonhold if they buy out the landlord, in both new and existing buildings. Commonhold provides a different management structure for blocks of flats and other interdependent buildings with shared services and common areas.
Please note that commonhold does not exist in Northern Ireland, but leaseholders have a right to buy out their ground rent.
4. Shared ownership
Housing associations offer shared ownership as a part-buy part-rent way to own a property.
You pay a mixture of mortgage and subsidised rent, making the homes affordable for those on or below average incomes.
If you start to earn more, you can increase your shares in your home, and have the option of owning the property outright.
New properties are very popular and offer lots of advantages:
Most new homes are covered by a National House Building Council (NHBC) Buildmark or equivalent certificate.
This provides a 10-year guarantee, but it’s not comprehensive, so don’t assume it covers everything.
Things to keep in mind
New houses often sell at a premium to reflect the included extras. After a few years, the price of new property moves into line with the local property market. Before you buy a new property, make sure you have a solicitor on board to check the property:
You should also get the builder to give you:
If you’d like to know more about what to look for when buying a new home visit the National House Building Council (NHBC) website.
Older properties and those needing work
If you want to buy an older property, we’d strongly advise having the building surveyed first. This will find out if there are any hidden structural problems, and could help you avoid spending a small fortune to fix things at a later date.
When you buy an older property for renovation, you need to check building regulations carefully – your surveyor can help ensure this is done accurately and professionally.
Some major building repairs may also need permission from your local authority building regulations department.
Before you buy a property to renovate, work out the total cost of repairs on top of the initial outlay – and decide whether the property is still worth renovating.
Listed buildings
If the property is a listed building, or in a conservation area, any work you do on it may be restricted, and have to follow certain guidelines. The scope for any structural change could be extremely limited and you’ll need to discuss any proposals with your local planning authority.
You may also have to get consent from English Heritage (or Welsh Heritage/CADW) before work can begin.
Most property is bought and sold through estate agents. Once you have chosen your property, you may be able to negotiate with the seller on the asking price. Owners do not have to accept the first offer that is put to them and you can make them an increased offer. Negotiation on the price of the property is often easier if there are repairs to be done, or if the seller is looking for a quick sale.
Before you sign anything, make sure that you know what is included within the asking price. Check whether you are keeping all the fixtures and fittings as listed in the property details. If you like the carpets, see if they are included too. You will find furniture isn’t usually included, unless it is specifically listed.
Remember, always check what is included in the price before agreeing the sale. Once you are happy, agree the terms in writing as oral offer is never legally binding. For the time being, either side can back out without facing legal charges.
Once you have chosen a property you will have to consider:
Unless you’re a cash buyer, you’ll need to arrange a mortgage to buy a home, we at Image Finance Ltd can take the stress out of this process for you. A mortgage is a loan against the property, and there’s a huge range of different ones available from banks, building societies and other lenders. Mortgage rates vary too, so it’s worth shopping around to get the best deal you can.
What can you afford?
Based on your income, your mortgage lender can help you work out how much you can afford to spend on a property. Most lenders will give you what’s known as an ‘offer in principle’, or the amount they’d be prepared to lend – and it’s useful to get this before you start looking for a home.
Also, bear in mind there are always additional expenses like legal fees and moving costs. An idea of things you’ll need to budget for are in the two lists below.
Moving costs:
Monthly costs:
You will need to employ a solicitor to handle the legal aspects of buying your new home. Once a property has been found your solicitor will liaise with the estate agent and the sellers solicitor.
An average purchase without complications, will take approximately 8–12 weeks, subject to both parties being in agreement, this timescale may be longer if the property being purchased is in a chain, or if you have a property to sell.
After all the enquiry forms and contracts have been signed and returned, this is the point at which it is time to exchange, where, if applicable, your solicitor will request deposit monies. The buyer and the seller will agree a date for completion, i.e. the date that the seller will need to move out of the property.
This is the stage at which the sale becomes legal and binding.
The date of moving will have been agreed by both parties. On completion day the funds will be exchanged between solicitors and the keys should be left with the estate agent for collection by the buyer.
From 10 September 2007 the requirement will be for houses with three bedrooms or more to have a Home Information Pack (HIPs). Smaller properties will be phased in before the end of the year.
What is a home information pack?
A home information pack (HIP) provides information to buyers about a property for sale. The government has introduced HIPs to offer buyers more information about properties they are considering buying, up-front and free of charge. The home information pack is prepared by the seller and contains a number of documents including an Energy Performance Certificate (EPC) that will contain information on the property’s energy efficiency.
Documents in the home information pack will include:
A number of other documents can be included in a HIP on a voluntary basis. These include a Home Condition Report (HCR). Those selling a property have to ensure that a home information pack is commissioned before the property is marketed for sale.
What is an Energy Performance Certificate?
An energy performance certificate (EPC) provides information on how energy efficient a home is on a scale of A-G similar to a white goods energy rating. The most energy efficient homes with the lowest fuel bills are rated A with the least energy efficient properties rated G. The EPC also includes information on the impact a home has on the environment and provides advice on cost effective energy saving improvements that could be made.
Homes are assessed and energy performance certificates produced by qualified home inspectors or domestic energy assessors.
What is a Home Condition Report?
The home condition report (HCR) is an objective report on the condition of the property that can be relied upon by buyer and seller. The report will be in a standard format and will cover matters of importance to a buyer - the general condition of the property taking account of its age, character and location and any defects or other matters requiring attention. The report will be produced by a fully qualified home inspector. Currently the HCR is not a mandatory requirement but estate agents and pack providers can include one in a home information pack on a voluntary basis.
How do I get a HIP?
If you are selling your home, there are a number of options. Usually a HIP will be prepared by an estate agent but you can request a HIP through a solicitor or use a specialist pack provider. Many estate agents and HIP providers are RICS members who are regulated and have a code of conduct to protect you and ensure that you receive clear, impartial and expert advice.
If you are buying a home, a HIP should be made available to you through the estate agent or directly from the vendor.
Can I compile my own HIP?
You can compile a HIP yourself if you're marketing a property independently or even if you're using an estate agent, you can still put together the HIP yourself. To produce your own HIP you will need to ensure that you have all the required documents. You can arrange for a solicitor or conveyancer to acquire the searches and legal documents and the Land Registry can provide evidence of title.
To acquire an energy performance certificate and a home condition report you need to find a registered home inspector or domestic energy assessor. A home inspector is qualified to undertake both a home inspection and an energy assessment whilst a domestic energy assessor is qualified to produce energy performance certificates only.
RICS has been approved by government to regulate RICS members carrying out home condition reports and energy performance certificates for inclusion in home information packs.
Why choose an RICS home inspector or energy assessor?
RICS is one of the most respected and high profile standards and membership organisations for professionals involved in land, property, construction and environmental issues worldwide.
The RICS home inspectors and domestic energy assessors registers regulate the activities of home inspectors and energy assessors and ensure that government prescribed standards are met. The RICS registers ensure that home inspectors and energy assessors are qualified to carry out their duties and require a Criminal Records Bureau check to provide assurance to the public that they are admitting someone into their home whose character has been validated. Membership of RICS is seen as the benchmark for the surveying profession – the mark of property professionalism worldwide.
How can I find an RICS home inspector or energy assessor?
You can find an accredited person to undertake an energy performance certificate or home condition report online at www.hcrregister.com
Buying / Moving costs checklist
Legal fees
Solicitors' fees
These vary from place to place. It’s worth asking if your solicitor will offer a no buy, no charge deal. When you buy, expect to pay the solicitor about 1% of the total agreed price – but check the range of services they’ll provide for the fee. It's often worth choosing a solicitor on the recommendation of a friend or colleague – otherwise contact the Law Society.
Land Registry fee
This is a charge on the purchase of the property and is related to the buying price – your solicitor will have a list of charges.
Local authority searches
These are checks to make sure there’s no reason why the sale can’t go through, and can bring up problems such as roads planned near the property which might affect your decision to buy. Fees vary depending on the property location.
Other searches
These are to check on things like mineral rights, flooding, subsidence, landfill sites and pollution in the area. Homecheck provides much of this information free of charge.
Valuation fee
This is usually included in the mortgage arrangement charges.
Mortgage arrangement fee
This varies from one lender to another, especially if you are taking out a fixed rate mortgage.
Mortgage indemnity policy
This is a one-off charge lenders make in case they have to repossess your property and sell it at a loss. It’s approximately 8% of the difference between your loan and what the lender thinks the future price of the property might be – and you only pay it if your loan is for a high percentage (between 95-100%) of the purchase cost of the property.
Mortgage redemption charge
You only pay this if you change lenders and break the terms of the mortgage – and it usually only applies to fixed rate mortgages.
Bridging loan
If you complete the sale on your new property before you sell the one you already own, you may have to take out a bridging loan. There are two types:
Survey
Keep in mind when you buy a home, you want independent advice, giving you the detail you need. A valuation from a mortgage lender may be free, but it only really tells you whether the house is worth the money they’re prepared to lend you.
A survey from an RICS member will tell you a great deal more, and could save you thousands in the long run – especially in older properties, or when you want to make alterations. Surveyors’ fees vary, so compare prices before choosing, and negotiate the fee to match the size and type of property. Ask the surveyor exactly what’s covered in the survey, so you know what you’re paying for and can ask them to look for extra things.
Estate agent’s fees
The charges are likely to vary from one agent to another, so get a range of agents to provide a quote for you. Sole agency fees are likely to be less than multiple agencies.
This is a tax on buying property for on the price you pay. A guide:
For more information, call the Inland Revenue on 0845 603 0135.
Buildings insurance
From the moment you exchange contracts, you need building insurance on your new property. Insurance rates vary between companies, so it’s worth getting quotes from several different insurers – and make sure you know exactly what’s covered in the policy.
Services
You don’t usually have to pay to have gas, electricity or water reconnected, but there may be a charge to reconnect the phone.
Moving expenses
The cost of moving varies according to how much stuff you have, how difficult it is to pack, how far you’re moving and the time of year. Shop around for the best deal – and remember it’s worth checking to see if the quote includes insurance.
Storage
If you’re not moving straight into a new home, you may have to consider storage. The costs for this vary according to the quantity of stuff involved – as a rough guide, a two-bedroom house will probably fill up to four containers, and a three-bedroom house can fill six.
Using the services of Image Finance Ltd offers real peace of mind because:
Further information
Image Finance Ltd has a range of free property guides including:
For a full list please go to Image Finance Ltd FAQ’s